Month: April 2017

President’s Tax Plan Leaves Out Infrastructure

As you have no doubt heard by now, the Trump administration yesterday released a tax reform “plan” that filled just one side of a single sheet of paper. Which is to say, the plan is light on details. The “goals for tax reform” are outlined:

  • “Grow the economy and create millions of jobs
  • Simplify our burdensome tax code
  • Provide tax relief to American families – especially middle-income families
  • Lower the business tax rate from one of the highest in the world to one of the lowest”

Some of the specifics include reducing the number of tax brackets, doubling the standard deduction while eliminating a number of itemized deductions (but preserving the deductibility of mortgage interest and charitable gifts), repealing the inheritance tax and alternative minimum tax, reducing the corporate rate to 15%, and switching to a territorial system of taxation for corporations.

Aside from the elimination of some tax deductions, the only other offset mentioned is a one-time tax on overseas earnings, or repatriation. This is notable if you care about infrastructure. The repatriation funding has long been considered the primary way to pay for a significant infrastructure investment. Even the president has mentioned this possibility in the past. With some $2.3 trillion parked overseas, a 10% tax could bring in hundreds of billions of dollars. But the new plan does not specifically tie repatriation to infrastructure, at least not at the outset.

Rep. John Delaney (D-MD), who has introduced bi-partisan legislation that would use repatriated funds specifically for infrastructure, called yesterday’s announcement a “punch in the gut.” His release on the tax plan states: “Strategically, this is a strong sign by President Trump that they’re not serious about infrastructure, it’s a punch in the gut on infrastructure, frankly. Today the White House essentially announced they aren’t doing infrastructure. After working on this issue for four years, it is clear to me that the only way you can pay for a real infrastructure program is by using revenues from repatriation.”

There is still a long path from here to passage of a tax package. But as a first draft, yesterday’s proposal would result in massive increases in the federal deficit and potentially make a large infrastructure package next to impossible. Let’s hope there’s more here than meets the eye, and that the president remains committed to ensuring we invest in the nation’s infrastructure as a major part of his economic plan.

Want America to Be ‘Great’ Again? Pay For It – By Pat Jones, IBTTA

The following article, Want America to be Great Again? Pay for It, by Pat Jones was originally published as a guest editorial in the April 18 issue of Time magazine. Pat Jones is the CEO of the International Bridge, Tunnel, and Turnpike Association (IBTTA), an organization that represents tolling agencies from around the nation and world. His organization has been at the forefront of advocating for increased resources to maintain our roads, bridges and tunnels, and other infrastructure. This blog argues for a coherent, thoughtful transportation policy that provides the necessary funds to ensure that America’s roads and bridges, and other infrastructure, are properly maintained. Most recently, Mr. Jones was a general session speaker at NARC’s  2017 National Conference of Regions.

Elon Musk recently announced that he is fed up with traffic in Los Angeles and will soon begin boring a tunnel under the city to relieve congestion. As a billionaire and innovator, Musk has the resources to make something like this happen. But even if he bores his tunnel, where does that leave the rest of the country with its congested highways, crumbling bridges, aging water systems and fragile power grid? One big push in L.A. doesn’t solve the problems of an entire country struggling under the burden of billions of dollars in deferred maintenance. We need a national vision to pay for and revitalize our infrastructure for all Americans.

For decades, my association (IBTTA) and many others have urged Congress and the states to make much bigger investments in our vital infrastructure. But we are still far behind where we would like to be. The problem is us. We say we want better roads and safer drinking water. But year after year, we refuse to come up with the money to make the big improvements that we need. Yes, some states and local governments have taken it upon themselves to raise revenue. But that isn’t enough to meet all our infrastructure needs.

But there is hope. President Donald Trump has shined a bright light on infrastructure. During the campaign, his inaugural address – and most recently, his Joint Address to Congress – he emphasized his commitment to rebuild roads, bridges and schools. Last October, his advisors published a paper that proposed $1 trillion in new infrastructure investment over ten years by offering tax credits to private investors. And recently, Senate Democrats introduced their own $1 trillion plan to repair crumbling roads, rebuild schools and do more while creating over 15 million new jobs.

As hopeful as these proposals are, there is a big problem: They are heavy on vision and light on details, specifically how to pay for them. Paying for a grand plan is always the sticking point. Those who advance these proposals don’t want to talk about “pay-fors” until the last minute, because they want to limit the opportunity of their adversaries to oppose them. So, we get the big vision first in the light of day, and the messy sausage-making of pay-fors in the dead of night.

And who’s to blame for this? The American people. It may seem that Congress and the President are pursuing wicked ends through clandestine means when they wrap up a deal with pay-fors at the eleventh hour. But they are simply following our lead.

Consider this reader comment in response to a recent newspaper article describing Americans’ reluctance to pay user fees to rebuild infrastructure. The reader said, “Americans want first class roads but don’t want to pay for them. Well, folks, nothing is free. No one will provide these things without taxes or user fees.”

In response to this attitude, Congress and the President have twisted themselves into unnatural shapes to say to voters, “Yes, we’re going to rebuild your infrastructure,” and “No, we’re not going to raise taxes or fees to do it (well, maybe just a little).”

This Harry Houdini act must end. We can’t rebuild our infrastructure if our elected leaders are forced to carry out our will wrapped in a straitjacket and submerged in a glass coffin rapidly filling with water. This tableau makes for great theater but lousy public policy.

Having a grand infrastructure proposal without a means to pay for it doesn’t solve the problem. It merely names the problem and a happy end state, without any of the hard work needed to get to the end. We need to be honest with each other and make sacrifices now to ensure a better future. Sacrifice in this case means money, with Americans paying more than they pay today in exchange for better infrastructure.

It’s time to treat the American people like adults and explain the need for bigger investment in the form of taxes and user fees. Adults understand that there is no free lunch and there are no free roads. Let’s have an honest conversation that starts like this: We are going to build and maintain the finest infrastructure in the world and we, the American people, are going to pay for it.

Federal Support for Job Training Programs

On April 4, the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies held a hearing, Examining Federal Support for Job Training Programs. Witnesses included University of Maryland School of Public Policy Professor and Atlantic Council Senior Fellow Douglas J. Besharov, Urban Institute Fellow Dr. Demetra Smith Nightingale, and Markle Foundation CEO and President Zoe Baird.

Bi-Partisanship on Capitol Hill?

What may have been most striking about the hearing was the comity members exhibited throughout, the positive nature of member statements and questions, and the balanced and thoughtful perspectives that were offered by the panelists. It appeared that the committee went out of its way to invite speakers who would paint an accurate, not politicized view of job training programs.  During their brief presentations, speakers addressed a range of topics that reflected overall support for the program.

Testimony on Job Training

Douglas Besherov noted that the American workforce is no longer the best trained workforce in the world. That needs to change, he said, and added that the current job training system has been part of the solution. He spoke of a job training center he visited in which practical nurses were trained to become registered nurses, and added that the program was so well done that the salaries of the women who became registered nurses increased almost immediately by $15,000.

Zoe Bird felt that American job centers were a significant strength of the workforce system, providing workers and employers with access to one another. She did note, however, that her experience in Colorado led her to believe that coaches could be more helpful if they had access to more data, resources, and digital training. Once the Markle Foundation stepped in to develop coaches, the connection between the center and employers improved and overall success rates went up.

Dematra Nightengale praised the program for its partnership between federal, state, and local governments, noting that job training is just one of the many services that job centers offer. She went on to highlight the activities that she believes are the most successful and effective, including:

  • Training for in-demand jobs through career pathways or apprenticeship programs;
  • Counseling and staff supported services;
  • Comprehensive and integrated youth programs;
  • Training that targets low-income people because employer-based training is generally not available for them;
  • Evaluations and evidence-based assessments to determine what works best.
Questions about Job Training

Committee members asked straight forward questions about the job training system and how it can be improved. Among the questions and answers were:

  • Is the workforce development system working?
    • Yes, but some aspects could be improved.
  • Which workforce programs are working best?
    • Core services with well-trained coaches, YouthBuild, Job Corps, and youth employment programs.
  • How important are the American job centers and are they working?
    • Yes, they are working and they are very important to the success of the system, though an emphasis needs to be placed on access to digital resources and training coaches.
  • Are there innovations that the federal government can offer to make the system even better?
    • The federal government could focus on improving access to data so that employers and workers can have access to better information.
  • Should the federal government continue to play a role in workforce training? And if so, what role should it play?
    • Yes, the federal government should continue to play a role and that role can be to develop training programs that are based on skills development and not seat time.
  • What one thing could make a notable and positive difference in workforce development?
    • The overarching theme was that we need to improve access to data. Data forms the basis for evaluations and ensures that strategies are data-driven.
Fact, Not Fiction

The questions reflected a desire to understand the job training system, how it is doing, and how it can be improved – Not how it could be cut, how the federal government could get out of the job training business, and whether the programs should be devolved to the states through block grants (code for substantially cutting a program).

NARC will continue to monitor the committee and provide updates on the state of workforce programs.

Budget Facts and Talking Points to Share with Congressional Leaders

The budget process is complex and filled with arcane rules and complicated precedents. Over the past seven years, Congress has passed and the president has signed a number of so-called budget control acts designed to limit overall spending and reduce the deficit and the debt. As a result, the budgeting process became even more complicated.

The Budget Environment

Since the Budget Control Act of 2011, various budget control acts have placed caps on spending, meaning that Congress could appropriate no more than a specific dollar amount each year. And each year, Congress is supposed to appropriate a lesser amount than the year before – to the extent feasible.  This is not always the case and sometimes Congress amends the law to allow for increases in spending.

The trend, however, has been to spend less; so much less that since 2011 non-defense discretionary programs have been cut by 16 percent. These cuts have impacted the Departments of Transportation, Housing and Urban Development, Health and Human Services, Labor, Commerce, Education, Interior, Treasury, Veterans, Agriculture, and Justice, and the Environmental Protection Agency – all of which are funded by the non-defense discretionary budget. If the president has his way, these departments and the programs they implement – that are important to cities, counties, and regions – will be cut by 25 percent, from $612 billion in fiscal year 2011 to $462 billion in fiscal year 2018.

Every effort is being made to change the direction of the conversation so that these additional cuts do not occur. And to be clear, this objection has nothing to do with the increases proposed to the defense budget. Rather they have to do with the fact that at some point the amount of money invested in non-defense discretionary programs may be too little to enable them to achieve their missions.

As House Appropriations Committee Chair Rodney Frelinghuysen (R-NJ) said, and I paraphrase, non-defense discretionary programs have been cut to the point where there is nothing left to cut without completely undermining the ability of these programs to carry out the mandate Congress gave them.

Budget Facts
  1.  In March the president introduced the outline for his fiscal year 2018 budget proposal. In May he will introduce a more complete version of his budget.
  2. Over the next month, Congress will develop its own budget resolution for fiscal year 2018, taking into account the president’s priorities and their own. The budget resolution developed by the House and Senate will be the framework for the appropriation bill or bills that Congress adopts for fiscal year 2018 (which begins October 1, 2017).
  3. Under current budget rules established by the 2011 Budget Control Act, funding for defense and non-defense discretionary programs must be about equal, and any increases or decreases in funding must be the same for both. A $54 billion increase in defense spending, for example, must be met by a $54 billion increase in non-defense spending; something that in Washington parlance is called
  4. Non-defense discretionary programs are funded through the non-defense discretionary portion of the federal budget, and represent approximately half of the entire discretionary budget. The other half includes spending for defense.
  5. The president, in his fiscal year 2018 budget proposal, would undo the parity requirement.
  6. The proposed budget would increase defense spending by $54 billion and decrease non-defense discretionary spending by $54 billion to offset the defense budget’s increase.
  7. Such a reduction in funding would devastate non-defense discretionary programs operated by the Departments of Transportation, Housing and Urban Development, Health and Human Services, Labor, Commerce, and Agriculture.
  8. Even without the president’s proposal, the sequestration rules established by the Budget Control Act of 2011 would require the Administration to sequester, or essentially confiscate $3 billion that Congress appropriated for non-defense discretionary programs in fiscal year 2018.
Talking Points for Congress

If you take the opportunity to meet with your congressional delegation when they are in their districts/state during recess (Saturday, April 8 – Sunday, April 23), tell them:

“We need a strong civil society where the connection between different people and groups is firm and vibrant, not brittle and divided. We need to defend against weaknesses within and enemies without, using the tools of civil society and hard power. We don’t have to pick one over the other.”

–Gen. Stanley McChrystal, The New York Times (on the subject of public broadcasting)

 

I would argue that the same can be said for the broad swath of non-defense discretionary programs: they contribute to a strong civil society and the choice should not be one over the other.

  1. Non-defense discretionary programs help us build a stronger, healthier, more integrated, and more secure nation. This is a critical point to make in response to the claim that we need to increase defense spending and decrease non-defense spending to ensure that we are safe and secure. Non-defense discretionary programs contribute substantially to national security by ensuring that our roads and bridges, water, and other aspects of our infrastructure are safe and secure; and our residents have the necessary skills to meet the needs of employers so that everyone is able to participate in civil society.
  2. Regional councils do not object to increasing defense spending by $54 billion per year if Congress, the Administration, and military services deem that such an increase is necessary to ensure the nation’s defenses and security.
  3. Regional councils object to cutting non-defense discretionary programs by $54 billion per year to offset the increase in spending for defense programs.
  4. Cuts to non-defense discretionary programs will result in:
    • Substantial cuts across the board, to programs that are important to regions, counties, and cities within your congressional district/state;
    • The elimination of housing assistance, CDBG, LIHEAP, and EDA; and
    • Significant reductions in workforce development, aging, and other human services programs.
  5. The caps on spending and the sequestration requirements of the Budget Control Act of 2011 have made major cuts to non-defense discretionary funding. To date, non-defense discretionary programs will have been cut by more than 16 percent since 2010, making it increasingly difficult to continue to operate these programs in the way Congress and the president intended when the programs were enacted into law.
  6. We urge Congress to find a solution that, at a minimum, maintains parity between defense and non-defense spending, by upholding the requirements of the 2011 Budget Control Act.

Take Action! Tell Congress: Don’t Cut Non-Defense Discretionary Programs

Now is the time to take action.
Now is the time to let Congress know that programs like the Community Development Block Grant (CDBG), Low Income Home Energy Assistance Program (LIHEAP), or the Transportation Investment Generating Economic Recovery (TIGER) grant program must not be cut.

The president’s fiscal year 2018 budget, if adopted, would substantially reduce or eliminate programs important to regional councils. The upcoming congressional recess (Saturday, April 8 – Sunday, April 23) provides an excellent opportunity to meet with your congressional delegation and tell them how much the federal funds matter to cities and counties, and how difficult it would be if these programs were eliminated.

Arrange meetings with your senators and representatives to educate them about your region, highlight your achievements, and show them how important federal funds are to the success of those programs. Provide them with concrete examples of the impact that potential cuts will have on these programs. Articulate specifics like: If we lose our TIGER grants, we will not be able to complete X number of road projects and we will need to terminate X number of employees (see step 3).

Here are a few steps to guide you in your advocacy efforts:
  1. Be sure to take one of your elected officials to each meeting. Our experience is that this can be very helpful and will add credibility that can be critical to a meeting’s success.
  2. Once you have gotten a commitment from your local elected officials, contact the appropriate congressional office to set up a meeting. Tell them you would like to meet with your senator/ representative, and ask them for only a small amount of their time. If they push back and try to assign you to a staff person, tell them you will be bringing one or more local elected officials who would very much like to meet with the senator or representative, and that the issues you want to speak about are very important for your region. Ultimately, it’s okay if you have to meet with a staff person, but at this particular time the senator or representative would be best.
  3. Be prepared. They need to know how significant these potential cuts are to the future of so many of the programs you operate. They need to know how your community improvement efforts would falter if CDBG were eliminated. They need to know how many households will go without heat this winter because the LIHEAP program was eliminated. They need to know that an important intersection improvement project will not get done if TIGER grants are done away with.
  4. Bring simple, straightforward briefs that summarize the programs your region is implementing, describe what your regional council does, how you do it, and why each program is so important. If you have brochures and annual reports bring those along as well, but don’t make these materials the focus of your meeting.
  5. See what commitments you can get them to make at the conclusion of the meeting. If they respond positively to any or all of your budget and appropriations requests, ask them if they are willing to be a congressional champion for one or more of the issues. If they are willing to be a champion, please ask them if we, NARC, can reach out to their Washington office, and to whom.
  6. Ask your senator or representative to identify a staff person for future contact.
  7. Invite your senator or representative to one of your program sites, whether it is a road building project, a new business that resulted from economic development activities, a dangerous intersection that is being fixed, a senior day care program, or something else. You want them to see firsthand what those federal funds that they appropriate are achieving, and how much the federal funding you receive is making a difference in the region.
  8. Thank them for the meeting and the support they agreed to provide.
  9. Send a thank you email.

If you obtain a meeting, please share that with NARC. We would appreciate knowing that you had a meeting, with whom you met, what was discussed, and what was the outcome. Please email this information to Neil Bomberg, senior policy advisor, at neil@narc.org.

In the next few days we will provide talking points to help you simplify your advocacy work and make your meetings more productive.