U.S. House and Senate budgets make billions in cuts for Michigan residents to pay for tax cuts for the ultra-wealthy

For Immediate Release
October 05, 2017

Contact:
Alex Rossman
arossman@mlpp.org
517.487.5436

Budgets threaten food assistance, Medicaid, disability programs, education, job training and more

LANSING—Today the U.S. House of Representatives passed a 2018 budget resolution that would slash billions of dollars from vital programs like food assistance and Medicaid that help millions of Michigan families afford necessities and get ahead. These damaging cuts at the expense of working Americans are designed to set up massive tax cuts for corporations and the very wealthy. The U.S. Senate’s budget resolution would have similar, harmful effects on Michigan residents.

The Michigan League for Public Policy has been warning residents about the impending devastation in President Donald Trump’s federal budget proposal and Congress’ continuation of its priorities. The federal budget was a primary focus of the League’s public policy forum held yesterday, and the League also recently developed a new fact sheet on the top threats to Michigan in the federal budget. The forum’s keynote speaker was Bob Greenstein, President and Founder of the Washington, DC-based Center on Budget and Policy Priorities, which has also prepared a report on the federal budget.

“Yesterday, hundreds gathered at the Michigan League for Public Policy’s policy forum to share their concerns about the impact of federal policies on our state. Today, those fears came one step closer to coming true,” said Karen Holcomb-Merrill, Vice President of the Michigan League for Public Policy. “The Michigan budget’s dependence on federal funds—currently accounting for 42 percent—makes our state particularly vulnerable to these federal cuts, and Governor Rick Snyder and legislative leaders in Michigan need to send their Republican counterparts in Washington a strong message opposing these cuts.”

An analysis by the League shows that Michigan is the second-most reliant on federal funds in the U.S., with 42 percent of our state budget coming from federal funds. The League has been urging Michigan residents to contact their members of Congress to oppose the cuts in the federal budget, but today’s vote still broke along party lines.

Both the House and Senate budgets set up a fast-track, partisan process for passing massive tax cuts for the wealthy and corporations. The GOP tax plan, released last week by congressional Republicans and the White House, would overwhelmingly benefit the top 1 percent in Michigan, who would receive 62.5 percent of the tax cuts, a new analysis released by the Institute on Taxation and Economic Policy (ITEP) shows. In Michigan, taxpayers who make over a million dollars each year (only .2 percent of Michigan’s population) would see an average tax cut of $253,500  while the bottom 20 percent of Michiganians would only see 1.1 percent of the tax cuts—or an average of $70, according to the ITEP analysis. The middle fifth of households in Michigan, people who are literally the state’s “middle-class,” would receive just 7.1 percent of the tax cuts that go to Michigan under the framework at an average of $440.

Not only would these tax cuts overwhelmingly benefit the very wealthy, they could also pile trillions onto deficits and likely force further cuts to health coverage and critical programs like education, and job training—and put more pressure on Social Security.

“The president and Congress appear to have the same misguided infatuation with tax cuts that some Michigan legislators have, and with this budget, they could decimate our revenue and devastate the services our state residents depend on,” Holcomb-Merrill said. “But residents still have power. Just as their voices and stories have helped fend off the repeal of the Affordable Care Act and a cut to the state income tax, they can fight back against these federal cuts.”

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The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.

U.S. House budget strips trillions from everyday Americans while giving huge tax cuts to the wealthy

For Immediate Release
July 19, 2017

Contact:
Alex Rossman
arossman@mlpp.org
517.487.5436

Michigan’s congressional delegation should reject the House budget and instead work toward a bipartisan plan that matches our state’s needs and priorities

LANSING—The U.S. House Republicans’ new budget proposal being debated today would make it harder for millions of Michigan families to make ends meet, with drastic cuts to healthcare and key assistance programs. Despite attempts to distance themselves from President Donald Trump’s horrendous budget, House Republicans are advancing a budget that would strip trillions of dollars from middle class and working families while providing tax giveaways to the very wealthy and profitable corporations. The budget also creates a special fast-track process that would allow Republicans to force through massive cuts in public investments and big tax breaks without bipartisan support.

“The House Republican budget proposal has the same fatal flaws as President Trump’s budget plan. It attacks support programs and economic opportunity for millions of struggling Michiganians to pay for huge tax cuts for the wealthy,” said Karen Holcomb-Merrill, vice president for the Michigan League for Public Policy. “It would also shift massive costs and likely bring massive cuts to the Michigan budget at a time when our state is already struggling to invest in education, transportation and other services hardworking Michigan residents rely on.”

For Michigan, the budget plan could result in devastating cuts to programs that expand economic opportunity for Michiganians, including job training, education and economic development programs in cities and rural communities. The budget would fall hardest on Michigan residents struggling in today’s economy, with cuts to programs that provide income assistance to help families get back on their feet and help nearly 1.4 million people in Michigan—including 563,753 children—afford groceries through the Supplemental Nutrition Assistance Program (SNAP). As Republicans continue their efforts to sabotage healthcare access, the budget includes additional cuts to Medicaid, which helps 2.5 million people in Michigan, including more than 650,000 through the Healthy Michigan Plan.

And underlying the whole budget proposal is a set of false assumptions about economic growth to hide that the proposed tax cuts would dramatically increase deficits and shift ballooning costs to states when revenues fall short of projections.

“The people of Michigan deserve a responsible federal budget proposal from our members of Congress—one that is based on real economic conditions and addresses the real challenges faced by struggling families, not one that uses fuzzy math to justify big tax breaks,” said Holcomb-Merrill. “Instead of fast-tracking cuts that shortchange Michiganians and threaten our state budget and economy, Michigan Republican members of Congress should focus on creating a bipartisan plan that makes investments in programs that match our priorities.”

The League has been tracking the potential disastrous impact of the federal budget on Michigan residents since President Trump’s “skinny budget” came out in March. The League has asserted that the Trump budget is an attack on people living in poverty and the programs that help them provide for their families. The Trump budget would have harmful effects on food assistance, energy security and health, and other programs. While the House’s budget proposal is not an exact replica of the Trump budget, it is largely a continuation of these devastating cuts.

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The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.

Block Granting Food Assistance: An Unnecessary Change That Would Hurt Michigan Families

pdficonApril 2017
Peter Ruark, Senior Policy Analyst

Block Granting Food Assistance SNAP chart 1The Supplemental Nutrition Assistance Program (SNAP), formerly called Food Stamps, is an important federal program that helps families and individuals put food on their tables. In place nationwide since 1964, it is available to households that are below 130% of the federal poverty level ($24,842 for a family of three). In February 2017, nearly 737,000 households in Michigan received SNAP benefits.

There are currently efforts to convert SNAP from a federal entitlement program (in which eligibility and benefit levels, work requirements and other rules are set by the federal government and benefits go to all applicants who are eligible) to a block grant (in which states receive federal funding to set up their own food assistance programs with their own eligibility standards and program rules). This is a “solution looking for a problem” that would harm a program that is currently doing what it is intended to do and doing it well.

SNAP IS WORKING WELL IN ITS CURRENT FORM

In Michigan and across the country, SNAP is the federal means-tested program most responsive to poverty and unemployment, expanding to meet need during economic downturns and contracting when the need recedes.1 As shown in Figures 1 and 2, since 1994 (when underemployment data became available), the percentage of the Michigan population receiving food assistance has closely mirrored the percentage of workers who are underemployed.2 Likewise, since 2005 (when poverty data from the American Community Survey became available), the number of people receiving food assistance has generally responded to the number who are in poverty.

In addition to effectively targeting those most in need and responding to economic downturns, SNAP has one of the most rigorous payment accuracy systems of any public benefit program and devotes substantial resources to combatting fraud. The result is that in recent years, less than 4% of SNAP benefits were issued to ineligible households or in improper amounts.3 By ensuring that the money is distributed in the proper amounts only to those who qualify, the current SNAP system preserves the integrity of the program and of the public funds used to support it.

BLOCK GRANTING SNAP WOULD COMPROMISE ITS INTEGRITY AND EFFECTIVENESS

The 1996 federal “welfare reform” legislation converted cash assistance from the federally administered Aid to Families with Dependent Children program to the Temporary Assistance for Needy Families (TANF) block grant to states. States used their allocated TANF funds and their required state-matching dollars (called “maintenance of effort” or MOE) to set up their own cash assistance programs with their own eligibility standards, benefit amounts, time limits, sanctions, family caps and work requirements (within federal guidelines). In Michigan, the TANF cash assistance program is the Family Independence Program (FIP). In addition to providing cash assistance, states are allowed to use the funds for other programs as long as they fit into four general purposes of TANF.4

Block Granting Food Assistance SNAP fig 1Lessons learned from federal and state TANF policy decisions, and the nature of block granting itself, raise serious concern that block granting SNAP would lead to lower benefits, fewer struggling families receiving assistance and compromised program integrity. Here are several ways in which SNAP could be harmed:

  • Reductions in Overall Funding: Block granting is almost always accompanied by funding erosion if not outright cuts. In 1997, the first year of TANF, Michigan received a block grant of $775 million to provide cash assistance and fund other poverty-reducing programs. The federal government has not increased the basic block grant funding level to Michigan or other states in the 20 years since 1997. As a result, due to inflation, Michigan’s block grant value has eroded to $510.6 million in 1997 dollars, leaving Michigan with much less money with which to help families in need.5 SNAP funds, on the other hand, come to Michigan based on the number of households that qualify rather than on a fixed amount that erodes with time. Block granting SNAP will likely be accompanied by severe cuts and a general erosion of the block grant over time.6 The most recent U.S. House Republican budget resolution assumed a SNAP block grant beginning in 2021 with $125 billion in cuts through 2026.
  • Block Granting Food Assistance SNAP fig 2Prioritization of State Budget Fixes Over Direct Assistance: The ability to use TANF funds for purposes other than direct cash assistance encouraged Michigan (and other states) to fill budget holes by funding existing programs with TANF and MOE dollars instead of the state’s General Fund. While some of these programs target families with low incomes, others tend to help middle-income families and individuals, such as college financial aid. With the flexibility to supplant TANF dollars in this way, providing direct assistance becomes a low priority. This is in contrast to SNAP dollars, which go entirely to the provision of direct food assistance to households. Block granting SNAP may similarly result in state lawmakers diverting food assistance dollars to fill miscellaneous budget holes instead of supporting families who are most in need.
  • Block Granting Food Assistance SNAP fig 3A Perverse Incentive to Cut Families Off Assistance: Enabling states to supplant state budget dollars with TANF dollars creates a perverse incentive to reduce cash assistance to free up money for other uses. Even as Michigan’s poverty and jobless rates during the past 10 years reached record highs, Michigan’s Legislature enacted policies to reduce FIP cases, including keeping the initial eligibility level low (a family’s income must now be at half the federal poverty level to begin receiving FIP) and establishing stricter sanctions and time limits. As a result, in 2015 only 4.5% of Michigan residents in poverty received cash assistance. There are now fewer families receiving cash assistance in Michigan than at any time since the early 1960s, despite the fact that many families continue to struggle. Because all SNAP funds coming into Michigan are currently used for benefits that go directly to recipients, or the administration of those benefits, there is no financial incentive for the state to cut families off assistance—which will change if SNAP funding is block granted.

Block Granting Food Assistance SNAP fig 4Compromised Accuracy and Oversight: The federal SNAP program has an extremely low rate of error and fraud due to diligent federal investment and effort to build up program integrity and efficiency over the decades. Block granting SNAP could shift much of the error and fraud reduction responsibility to states, which do not have needed infrastructure and financial resources comparable to the federal government, resulting in misdirected funds and compromising the ability to effectively provide benefits to those who are supposed to receive them.

Michigan’s experience with TANF and cash assistance illustrates why block granting TANF has been harmful to families with low incomes and to the cash assistance program itself. As seen in Figure 3, while Michigan’s underemployment rate shot up during the 2000s to as high as 21.5% in 2009, the Family Independence Program remained disengaged from the hardship as caseloads remained flat. Likewise, Figure 4 illustrates how FIP was unresponsive to changes in the poverty rate during the past 10 years.

Rather than enact legislation that would harm a program that is working well and hurt struggling families in the process, Congress should build on SNAP’s success by updating household benefit levels to reflect current food prices and providing more support for food assistance recipients to participate in education and training that would increase their earnings.

ENDNOTES

  1. Rosenbaum, D., Block-Granting SNAP Would Abandon Decades-Long Federal Commitment to Reducing Hunger, Center on Budget and Policy Priorities, March 2017.
  2. The underemployment rate is the number of workers who are unemployed, who involuntarily work part time for economic reasons, and who are marginally attached to the labor force (not in labor force but have looked for a job in the past 12 months), divided by the total in the labor force and marginally attached to the labor force.
  3. Rosenbaum, op. cit.
  4. The four purposes of the TANF program are to: 1) provide assistance to needy families so that children can be cared for in their own homes; 2) reduce the dependency of needy parents by promoting job preparation, work and marriage; 3) prevent and reduce the incidence of out-of-wedlock pregnancies; and 4) encourage the formation and maintenance of two-parent families.
  5. Calculated using the online Bureau of Labor Statistics CPI Inflation Calculator on April 4, 2017.
  6. Rosenbaum, op. cit.

SNAP: Fighting the long-term effects of hunger

I admit I do not understand what it feels like to be truly hungry. Sure, I’ve forgotten my breakfast or lunch from time to time, but I’ve always been able to count on the fact that there would be food in my cupboards. I cannot imagine the short- and long-term effects of hunger.

Yet, for many Michiganians, and many children, hunger is still a real problem. According to a recent federal report, between 2013 and 2015, almost 15% of Michigan households struggled to put food on their tables. Nationally, this rate is higher among households with children. (more…)

Michigan should eliminate its asset limit for food assistance

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July 2016
Senior Policy Analyst, Peter Ruark

What is the food assistance asset limit and why is it a problem?

Families who experience financial difficulty due to unemployment or a medical emergency often seek assistance from the Supplemental Nutrition Assistance Program (SNAP; formerly known as Food Stamps) for purchasing food. This assistance can help keep their household stable, including keeping food on the table for children, until the family can get back on its feet. Many seniors and people with disabilities also depend on SNAP to keep from going hungry.

MI Should Eliminate SNAP Asset TestUnfortunately, in some states including Michigan, there is a limit to how much a family can have in assets in order to be eligible for SNAP. This is commonly referred to as the “asset test.” Assets are resources available to purchase food, such as bank savings. Houses, personal property and retirement savings do not count as assets, although automobiles do. Michigan’s asset limit is $5,000, which means that if a Michigan family has more than $5,000 saved in a bank account or a savings plan, it must spend down its savings to below that level in order to qualify for food assistance. This policy essentially punishes families for saving for emergencies and for their children’s futures.

There is a federal asset limit for SNAP, but in 2002 the federal government gave each state the option to raise its asset limit or eliminate it entirely. Recognizing that the SNAP asset limit is counterproductive, 34 states and the District of Columbia have eliminated it. Michigan was one of the first states to eliminate the asset limit, but reinstated it in 2012, a time when many Michigan families were still struggling to make ends meet.

Is it unfair for Michigan to impose a SNAP asset limit when so many other states have eliminated theirs?

Yes. Michigan suffered more than most other states during the 2000s, including four years when it had the highest unemployment rate in the nation, and although its economy has improved to some degree, many families continue to struggle.

Families who have saved up money to weather future economic storms or to invest in their children’s future should not have to spend down all but $5,000 of their savings if they need to receive temporary help from SNAP. By requiring this, Michigan is punishing prudence and long-term thinking. Because SNAP functions for most households as a temporary stopgap (58% of new recipients leave the program within one year), it makes sense to allow families to retain their savings as they get back on their feet.

Why and how did Michigan reinstate the asset limit?

In 2012, media publicity around a lottery winner continuing to receive food assistance while collecting winnings prompted the Michigan Legislature to pass Public Act 79, which states simply, “For the purposes of determining financial eligibility for the Family Independence Program or the Food Assistance Program administered under this act, the department shall apply an asset test.” That year, Michigan also passed Public Act 78, which requires that the Michigan Lottery inform the Department of Health and Human Services (DHHS) of lottery winnings of over $1,000, and that lottery and other gambling winnings be counted as unearned income (if received in installments) or as assets (if received in a lump sum) for determining continuing eligibility for SNAP benefits. The Department of Human Services (now the Department of Health and Human Services) responded by establishing an asset limit of $5,000.

What can Michigan do to make it easier for struggling families with some savings to receive food assistance?

Current law requires Michigan to have a SNAP asset limit but does not stipulate a specific amount; that is left up to DHHS to determine. The department can raise or lower the limit but cannot eliminate it under current law. Likewise, if the current law requiring an asset limit is eliminated, the department can still choose to impose an asset limit.

Because it would require only a departmental and not a legislative change, the easiest way to allow families to save more money while they are receiving SNAP benefits is to raise the limit rather than eliminate it entirely. Nebraska has an asset limit of $25,000, five times the amount of Michigan’s limit, allowing families to build savings while receiving assistance.

Michigan can also join the 34 states and District of Columbia in eliminating the asset limit entirely. This would require a legislative change to eliminate the requirement to impose an asset test, followed by a departmental action to remove the asset limit itself. If the Legislature wants to keep the restriction on lottery winnings, it would need to modify that wording accordingly.

MI Should Eliminate SNAP Asset Test (Read-Only)

 

House Appropriations Committee takes major step to strengthen food assistance

We are happy to announce that yesterday, thanks to the work of Representative Jeff Irwin (D-Ann Arbor), the Michigan House Appropriations Committee unanimously voted to include $3.2 million in the state budget to restore $138 million in federal food assistance benefits for approximately 150,000 low-income households. These individuals’ benefits were reduced by an average of $76 per month due to changes in the “heat and eat” policy. Many of these households include elderly and disabled individuals.

The Michigan League for Public Policy has been working with legislators and state officials to remedy this issue for several years. It was eighteen months ago that the Michigan Department of Health and Human Services declined to pony up some state money in order to continue federal Supplemental Nutrition Assistance Program (SNAP) benefits for many Michigan residents. In 2014, Congress increased the amount from $1 to $21 that states would need to spend on heating assistance for certain households in order for them to receive higher food support benefits, saying the states in the “heat and eat” program were exploiting a loophole to increase some households’ food assistance by paying only $1 in heating assistance to those households. (more…)

11% of Mich. vets in households receiving food aid

More than one in every 10 Michigan veterans lives in a household that receives food assistance, a new policy brief estimates.

The report from the Center on Budget and Policy Priorities, released today in time for Veterans Day, is a reminder that thousands of struggling veterans use food assistance (formerly food stamps) to put food on the table.

(more…)

‘Heat and eat’ — another squandered opportunity

Michigan is being penny-wise and pound-foolish, refusing to pay $3 million to bring in $137 million in federal food assistance to 150,000 low-income households.

There are two issues in play here. The first is is that the Supplemental Nutrition Assistance Program (formerly food stamps) does not keep up with family food costs. The second is that Michigan has been able to raise SNAP benefits by an average of $76 per household, but now refuses to do so. (more…)

Statement: Food assistance agreement far better than alternative

Contact: Judy Putnam at (517) 487-5436

Statement: Food assistance agreement far better than the alternative

The Michigan League for Public Policy released the following statement on the U.S. Farm Bill agreement affecting Supplemental Nutrition Assistance Program benefits, known as the Food Assistance Program in Michigan and formerly called food stamps. The House approved the compromise version today. (more…)

Hunger grows at time of thanks

From the League’s First Tuesday newsletter
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It’s November and time to look forward to Thanksgiving — a treasured American holiday, symbolized by the bounty of the pilgrim harvest. For my family, that means turkey, stuffing and all the trimmings.

For too many in Michigan, however, Thanksgiving will be a reminder of the ongoing struggle to put enough food on the table.

Nearly one in every seven Michigan households reported difficulty affording food at some point last year. And a plan before Congress, if adopted, will worsen hunger and jeopardize Michigan’s fragile economic recovery as well. (more…)