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Updated: 10 min 41 sec ago

Our Upside-Down Tax System

April 25, 2017 - 10:33am

The Pew Research Center released the findings from a recent survey (conducted April 5-11, 2017) that shows an increasing number of Americans find our current tax system unfair.

What do people believe is most unfair about our tax system? Nearly 2/3 (62%) of Americans are bothered “a lot” because some corporations do not pay their fair share in taxes; 60% are equally bothered because some wealthy people don’t pay their fair share.

A significantly less number of Americans are bothered by the amount they pay in taxes (only 27% are bothered “a lot” by this).

What does this tell us?

Americans are ready to fix our unfair tax system. In Pennsylvania, we have a chance to do just that.

What people perceive about corporations and the wealthy not paying their fair share in taxes is, in fact, true. Especially in Pennsylvania.

First let’s look at the wealthy.

The chart below shows that higher income taxpayers pay a lower share of their income in state and local taxes. The top one percent pays less than half of the tax rate of the middle class and two-third’s less than the lowest 20% (earning less than $22,000 a year). We refer to this as an upside-down tax system because it is those people who earn the least amount of money that are paying the highest proportion in taxes and vice versa.

 

Not all states have such a system.

Take a look at Delaware:

or Maryland:

or West Virginia:

Now, let’s look at corporations. The graph below shows how corporate taxes, as a percentage of the state’s general fund revenue over time, has been declining since 1972. In 1972, corporate taxes accounted for 30% of the general fund revenue while today they only account for 17%.

No wonder the state struggles to pay for the services Pennsylvanians want, like quality public education for our kids and human services that help care for our most vulnerable.

Senate Bill 555, otherwise know as the Fair Share plan, proposes to fix this upside down tax system by dividing our Personal Income Tax into two parts: 1) a tax on wages and interest and; and 2) a tax on income from wealth. This plan would raise $2 billion a year by increasing tax on income from wealth (from the current rate 3.07% to 6.5%) and decreasing the tax on wages and interest from 3.07% to 2.8%.

Still not convinced? Compared to neighboring states, with this plan the top 1% in Pennsylvania will still have an overall tax rate of 3.6%, below Ohio (3.7%), Maryland (4.2%), Delaware (4.9%), New York (6.6%) and New Jersey (6.6%).

And that’s not all. With the Fair Share plan, 85% of Pennsylvanians will see their taxes decrease or stay the same. Which, according to the Pew Research Center study, is not most people’s primary concern. Ensuring that corporations and the wealthy pay their fair share is.

The Fair Share plan, then, is exactly the kind of public policy Pennsylvanians will support. Will our elected officials?

To learn more about the Fair Share plan in PA, go to http://pennbpc.org/fair-share-tax-support-public-investment-pennsylvania.

Attacks on Public Sector Workers Hurt Working People and Benefit the Rich

April 22, 2017 - 1:47pm

Republican lawmakers in the Pennsylvania House and Senate continue to promote bills that would reduce the power of public sector unions by undercutting them financially. These bills would make it harder or illegal to collect some current contributions to unions (e.g., from non-members who enjoy higher wages and benefits and workplace representation from public sector unions). While proponents say these proposals would benefit taxpayers and private sector workers, in reality weakening public-sector unions hurts middle-class taxpayers and workers in both the private sector and the public sector. One reason for this is that public sector unions are vital advocates for public policies that benefit the middle class as a whole, such as raising the minimum wage, protecting Social Security, or fighting for more affordable and accessible health care.

Now we have some fresh evidence that attacks on public sector workers hurt working people and benefit the wealthy — from Wisconsin. As documented by Gordon Lafer, after weakening public sector workers, Wisconsin lawmakers enacted $2 billion worth of tax cuts in 2011-14, paid for by the layoffs and wage and benefit cuts of public employees. Lafer shows that the benefits of these tax cuts skewed dramatically to the rich. The top 1 percent enjoyed an average tax cut of $2,500 per year, over 20 times the $118 cut for the bottom 60 percent of taxpayers. 

Republican champions of bills that would weaken unions clearly hope to make Pennsylvania “the next Wisconsin” in the next several years. Pennsylvania has already cut taxes so much for the wealthy over the past 15 years — as a result of over $3 billion in corporate tax cuts. Those cuts exacerbated the blatant unfairness in Pennsylvania’s upside-down tax system, which requires middle-income families to pay 10.1% of their income in state-and-local taxes, low-income families to pay 12%, and the top 1% to pay only 4.4%.  

In Pennsylvania, the immediate tax issue before us is raising revenue — revenue needed to cover the current costs of education and essential services and to address the state’s investment deficit. The Pennsylvania Budget and Policy Center has advanced a creative proposal that would raise $2 billion in revenue. This Fair Share Tax would cut taxes for nearly six in 10 Pennsylvanians, while raising half the new funds from the top 1% and 88% from the top fifth. 

Public sector unions will play a critical role in any successful effort to achieve fairer taxes in Pennsylvania that especially benefit moderate income families concentrated in rural areas and some urban neighborhoods. Those same taxpayers would also benefit disproportionately from the education and other services funded by additional revenue.

So when advocates for laws that would weaken public sector unions tell you that this would benefit most taxpayers and the middle class, don’t believe them. If you care about a fair tax system, a higher minimum wage, quality public school for all, accessible and affordable higher education, health care for the middle class, services for the vulnerable — most government investments that help Pennsylvania thrive and make it more humane — the fight to protect the strength of public sector unions is your fight. If we do follow the lead of Wisconsin in the next several years, it will not be pretty…except for very rich people happy to live in insulated communities unaffected by how others in the state are doing.

Health Care Again

April 21, 2017 - 11:30am

Health Care Again

News reports indicate that, as many of us had feared, the Republicans in Congress and President Trump have not given up on their effort on health care, not only to repeal and replace the ACA but to institute a per capita cap on Medicaid spending.

The new plan, as we will explain in a moment, is even worse than the last one. But before we get to the details, we need to stop and ask, “why are we here again?” Knowing the answer to that question is critical to understanding what the Republicans propose.

Why Health Care: Avoiding the Loser Label

There are basically two reasons the Republicans are seeking a mulligan on health care. The first is that Trump and the Republicans promised to repeal the ACA and don’t want to look like losers to their hard-core, right-wing voters and to the Washingtonians who are inching closer to the view that neither Trump nor Paul Ryan nor Mitch McConnell have any idea how to run a government. They need a win.

But that answer is neither necessary nor sufficient. For there are other wins possible. Given that the debate over the first Republican repeal and replace plan showed that a majority of the country stands opposed to 24 million people losing health insurance and higher health insurance costs for seniors and those with low-incomes, one would think that the Republicans would be looking for other wins. They might, for example, make a deal with the Democrats to improve the ACA, rename it TrumpCare, and then declare victory. Doing so would reveal that much of their campaign against the ACA was disingenuous. But inconsistency and even dishonesty are evidently not the problems in politics they once were. Compared to much else Ryan and McConnell, let alone Trump have said, how hard difficult would it be for them to get away with a claim to have transformed the ACA? Indeed, Trump could honestly say that only he could have cut a deal that brought Democrats and Republicans together to set the ACA straight. The right wing of the party would scream and holler about that deal. But it is apparent that they are going to do so about many things, from raising the debt ceiling to passing a continuing resolution to almost any version of tax reform. Trump, Ryan, and McConnell are going to have to learn to govern without 20 or 30 of their House members. Why not start now?

Why Health Care: Tax Cuts for the Corporate Elite

So if we are going to understand why the Republicans are back with a new health care plan, we are going to have to look deeper. And fortunately, a new report from Health Care for America Now and Americans for Tax Fairness, helps us understand what is really at stake. For the truth of the matter is that the Republicans need to enact a health care bill in order to provide tax cuts to corporations and the rich. Eliminating most of the taxes increased by the ACA will save the very rich $275 million over ten years and also provide large tax breaks to insurance companies ($145 million over ten years) and drug companies ($25 billion over ten years). (And that same top-heavy distribution of tax breaks is found in Pennsylvania , too.) But those tax cuts are not the only ones the Republican seek.

Remember the biggest spending reduction in the first Republican health care plan did not come from eliminating the Medicaid expansion and reducing subsidies for health care purchased in the exchanges. The biggest spending reduction came from instituting per capita caps on the traditional Medicaid program which, over ten years, would save $880 billion nationally and $18 billion in Pennsylvania over ten years while forcing states to drastically cut Medicaid health care and long-term living benefits and limit those who are eligible for them.

Why do Republicans seek such cuts? Because they need them to use the reconciliation procedure to avoid a filibuster on their plan to enact tax “reform” that contains deep tax cuts for corporations and the one percent. Under Senate rules, tax changes can be enacted through the reconciliation procedure – which requires 51 rather than 60 votes – only if they do not increase deficits over ten years. In other words, tax reform through reconciliation has to be revenue neutral. But a revenue neutral plan won’t give Republicans the tax cuts for the rich and powerful they want. So they need deep cuts in health care spending – far beyond that which is required by repealing the ACA alone – to balance tax cuts for the wealthy and corporations. In a different version, the Republican health care plan saved $150 to $300 billion over ten years that Trump, Ryan, and McConnell planned to use to pay for their tax plan.

So that’s why health care is back on the agenda. It has nothing to do with helping Americans get health care, let alone with helping them stay healthy. And it has everything to do with tax cuts for the core Republican constituency – the corporate elite.

And that’s also why the Republicans have decided to try to build a majority, not by winning over their more centrist members but, instead, by appealing to the far right. The result, though, is a bill that, as the details are revealed, will seem even more appalling to most of us than the one rejected a few weeks ago.

The New Plan Has All the Bad Features of the Old One

To begin with, what we are likely to see are the worst elements of the old plan in the new one. Again, the Medicaid expansion will be slowly strangled. Again, traditional Medicaid will be subject to per capita caps on spending. Because of those caps, federal reimbursements will not grow as fast as health care costs. Together, these two provisions will result in a huge reduction in the number of people with health insurance, approaching 24 million nationally and about a million in Pennsylvania .

And Some New Ones, Too

The new elements in this plan make it worse than the old one. While the Republicans may technically keep the essential benefit requirement, they will allow states to seek waivers from it and those waivers will be automatically granted. The results will be disastrous. Eliminating an essential benefits requirement effectively ends the prohibition on annual or lifetime limits on insurance. And while they will keep the popular ACA requirement that insurance companies offer insurance to anyone regardless of their medical condition, they will allow states to seek waivers from the regulation, called community rating, that prevents insurance companies from using preexisting conditions as a basis of setting insurance premiums. The result will not surprise anyone: people with severe or even moderate medical conditions will be offered insurance, but not insurance that they can afford.

Why would the Republicans embrace an idea that will appall so many? Because, they believe that it will reduce premiums for those who don’t have pre-existing conditions and, in turn, reduce the need for subsidies to make insurance affordable for them. Again, it is all about reducing health care spending so that money is available for tax cuts.

High Risk Pools

And what of the people – tens of million nationwide and over a million in Pennsylvania alone – who have serious pre-existing conditions and fear losing affordable insurance? There the Republicans claim to have an answer: they will offer federal funds to subsidize state high risk pools to make insurance affordable for all those folks who get health insurance through the exchanges now (or could in the future) but will not be able to afford it when community rating is abolished.

Could this work? The answer is yes, in theory, but certainly not in practice. And the reason it won’t work will be obvious if you give it ten seconds thought.

Providing good health care for all the people with and without pre-existing conditions who secure health insurance through the exchanges will cost a certain amount of money under any plan. And the amount is not going to change much regardless of what system is used to pay for it. People need the health care they need.

Under a single payer plan, tax dollars would pay for it all. Under the ACA, it is paid for by a combination of the premiums people pay, including the slightly higher insurance premiums paid by young and/or healthy people, the premiums paid by older and/or less healthy people and by the subsidies for insurance for all of them that are paid for by tax dollars.

And under the Republican plan, it would be paid for by lower premiums paid by young and/or healthy people, by slightly higher premiums paid by old and/or less healthy people and by the tax dollars that pay for subsidies in both the exchanges and the high risk pool.

the total amount needed doesn’t change much from one payment scheme to another. And thus there is no reason to think that there will be any savings in tax dollars if those high risk pools actually do what they are supposed to do and provide the same quality insurance to those who have pre-existing conditions as those who do not. Indeed, given that the Republicans want to reduce insurance premiums for young and/or healthy people and make insurance affordable for older and/or less healthy people in the high risk pools, the tax dollars needed to make the high risk pools work will have to be higher than that needed under the ACA.

The whole goal of the plan, however, is to reduce federal spending. The Republican plan only saves tax dollars if those high risk pools provide inadequate and overly expensive insurance for people with pre-existing conditions. And that is exactly what the Republicans intend to happen, and it is what will happen. Under the Republican plan, older, less healthy people will be cordoned off into health care plans of their own, paid for by individual states possibly with some, but certainly not enough, federal support. And as a result, their power to organize politically to protect themselves from inadequate, overly expensive insurance will be severely diminished.

And if you doubt that this will be the result, look at previous attempts to create high-risk pools , which were always underfunded and always left out most of those who needed their help.

Divide and Conquer

The Republican plan for high risk pools, then, parallels their plan to institute per-capita caps on Medicaid. It’s an attempt to divide and conquer the pool of people who need help from government by placing the states, most of which are like Pennsylvania in being both fiscally stressed and harder for lower and moderate income people to influence, in charge. And this plan is not different from what we already do in dividing the relatively well-off people, who get huge federal subsidies for employer-based insurance, from the relatively less-well off people who get insurance from the exchanges or Medicaid.

The Republicans have, time and again, pretended that we can provide health care to people without some shared, communal effort. But that’s never been true for those who receive decent health care now . And if we don’t keep extending that communal effort to the low and moderate income people who, before the ACA didn’t benefit from it, they will again be left out.

Thus, there is nothing about the Republican plan that is honest and straightforward. It is motivated not by improving health insurance, let alone health care, but by an insistence on reducing taxes on corporations and the rich. It is not designed to offer better health care but, rather, to divide the American people and weaken the political forces that are the only guarantee that we will support providing quality affordable health care to people with pre-existing conditions.

The Republican health care plan is thoroughly dishonest. It’s an equivocation hidden behind a false front underneath a dodge.

It must be defeated.

 

House GOP Budget Unites Pennsylvanians Across the Political Spectrum ... in CONDEMNING It

April 11, 2017 - 6:25pm

House Bill 218, the unbalanced, cuts-only budget that House Republican leaders fast-tracked through the lower chamber in a near party-line vote last week, has provoked plenty of criticism. Not surprisingly, Democratic legislators decried the many cuts that accompany a budget that reduces total expenditures by 1% over the current fiscal year. The absence of a plan for raising revenue to close the $3 billion structural deficit — itself a product of years of irresponsible budgeting — and to fund even this austere spending plan earned it a "Point of Order" column from Capitolwire's Bureau Chief, Chris Comisac, with the headline, "A little more transparency in the House GOP budget proposal would be nice." Advocates for quality childcare and pre-K education protested the significant reductions to these vital programs, noting that HB 218 not only cuts the minimal increases proposed by Governor Wolf, but the House GOP budget actually reduces investment in childcare by $28 million over last year’s budget.

But the harshest criticism of the budget passed by House Republicans came from a somewhat unlikely source. See if you can guess who expressed these "grave concerns" about HB 218:

"Far from being a 'no-tax-increase' budget and far from being a document that provides a path forward for the commonwealth, it instead represents a continuing pattern of the state failing to meet its full responsibility to its service delivery partners and its citizens most in need. The proposal contains sweeping cuts in funding for human services, criminal justice, and administrative programs … Funding is a tangible reflection of policy choices, and so the array of cuts being proposed signals the commonwealth’s failure to recognize its commitment to needed support and needed reforms … Plainly and emphatically, the lack of adequate funding from the commonwealth will mean local tax increases to maintain services. This is clearly not a no-tax-increase budget. Any vote for this budget is a vote for property tax increases."

Did you guess "Pennsylvania Budget and Policy Center?" Granted, it sounds a bit like something we might say. But it's not.

Maybe you thought it was Governor Wolf. It wasn't. Our Democratic governor responded to the House budget diplomatically, saying, "It’s a good starting point."

Some contingent of the "Bernie Sanders for PA" campaign? Again, understandable. But wrong.

No, this response to the House GOP Budget came from a bipartisan group of elected officials: the County Commissioners Association of Pennsylvania. If anything, the CCAP skews conservative, with more county governments in the state under Republican control. Like state representatives, they are accountable to the local communities that elect them, and they are not interested in raising taxes any higher than is necessary. Unlike members of the state House, though, they are willing to acknowledge that the services that are needed to maintain the health and well-being of their communities come with a price tag. County Commissioners also differ from state lawmakers in that the options available to them to raise necessary funds are very limited. While the General Assembly can generate revenue through a broad range of options and combinations, the primary means available to county governments is local property taxes. And when members of the legislature refuse, for ideological reasons, to consider ways of fairly raising revenue — enactment of a gas drilling tax like every other major gas-producing state; closure of tax loopholes that allow the wealthiest corporations to get a free ride at the expense of individual taxpayers; or implementation of the Fair Share Plan (SB 555) that would fix our upside-down tax system by giving a tax break to most working Pennsylvanians and ensuring that the super-rich begin paying their fair share — County Commissioners are forced to pay for for the services their communities need by raising property taxes.

County Commissioners of both parties are able to see through the "no tax increase" boasting of their fellow elected officials in the General Assembly and recognize the House GOP budget for the irresponsible sham that it is. The question is: when will the constituents that they all serve begin to recognize it, too, and insist that their state legislators start doing their jobs? 

Facts, Not Hysteria, About the Soda Tax

April 11, 2017 - 1:31pm

Co-authored by Diana Polson.

The reaction of the beverage industry to the Philadelphia soda tax continues to be self-centered, hysterical, and dubious.

Before looking at their claims, let’s keep in mind something very important: every tax has some negative consequences for some businesses. And, yes, it is a shame if some business absorbs some costs and a few people lose jobs as a result. But public policy has to be driven by the consequences for all of us. So, the question is not whether an individual business is hurt by the Philadelphia soda tax, but whether the city and its citizens benefit on the whole. We think the answer is clearly yes, not just because of the investment in Pre-K education and community recreation centers made possible by this tax, but because of the health and economic benefits of reduced soda consumption.

There is no independent verification of large declines in soda sales or grocery sales in Philadelphia or of declines in employment at grocery stores or soda distributors. They are a lot of wild claims and threats made by the beverage industry, which conducted an expensive and dishonest campaign against the soda tax and has launched a dubious lawsuit against it. They are afraid of the soda tax spreading to other cities and want to kill it in Philadelphia.

Some of the claims made by one grocery store owner, of a decline in total sales of 15% to 30%, are inconceivable. Our analysis of a survey done by the grocery industry’s trade magazine Progressive Grocer, shows that only 6% of food sales and 2% of total sales in grocery stores are drinks — and that includes drinks not taxed by the soda tax. Even if soda sales dropped by 50% — an unverified claim — how could grocery stores be suffering a 15% drop in total sales? Indeed, if sales had dropped by so much, we would see a larger reaction from the entire grocery industry. They would have surrounded City Hall with tractor-trailers.

Some of the decline in sales will probably be reversed as people get over the shock of higher prices. Perhaps some people crossed the city line to buy soda once or twice. But most people shop for groceries close to home and will continue to do so after their initial reaction subsides — and five new grocery stores have opened in the city since the tax was instituted. Remember that the tax is on soda, not thirst. People will purchase alternatives to sugar-sweetened drinks. Grocery stores could help this happen faster by creative marketing instead of complaining.

When we look at soda distributors, we see no reason to think that the soda tax has or will to large layoffs — and as unemployment compensation claims are filed, we will be looking for an evidence of such layoffs. A recent article quotes a Coke representative saying that sale of soda in smaller sizes is actually increasing in the city, a trend that began before the tax was enacted and continues after it. And the same article says soda sales seem to be increasing in the suburbs, which will partly make up for declines in the city. Even if distributors are laying some people off, how do we know it’s due to the soda tax? There is always change in the beverage industry. Pepsi has been out front saying the tax will lead to lay-offs. But Pepsi closed a plant in Reading late last year. Is it losing regional market share? Finding a more efficient way to deliver soda? We don’t know whether lay-off threats are real and whether there is any reason to blame the soda tax.

It is possible that some jobs will be lost in soda distribution and marketing. But the jobs gained from new investment in pre-K education and rebuilding Philly’s playgrounds and recreation centers are likely to make up for those lost. Meanwhile, the children who get good Pre-K education due to the revenues raised by the tax will see long-term benefits in educational attainment and earnings.

At any rate, some decline in soda sales after enactment of the tax was expected and should be welcomed. It’s a feature of the law, not a bug. And it hasn't interfered with the revenue from the soda tax, which continue to come in above projections. We wrote a report that showed that in every class, racial and ethnic group, people drink too much soda (and too much other sugary drinks) with terrible long-term health consequences. Because of the soda tax, rates of diabetes and heart disease in Philly will drop, as will individual and public expenditures for health care.

It would be great if every public policy were a win-win for everyone. But when it comes to taxes, someone loses. In this case, it’s the beverage industry whose high profit margins and deep pockets not only enables it to deal with the consequences of a small decline in sales, but has given it the resources to fight a long public relations, lobbying, and legal campaign to keep those high margins in Philly and in the rest of the country. We shouldn’t let its high-priced campaign dissuade us from supporting a tax plan that has enormous benefits for the city and its citizens.

Guest Blogger: We Must Have Missed the Memo

April 10, 2017 - 11:55am

by Jin David Kim, Communications Director, PCCY

Some state representatives, siding with the research and the will of the people they represent, have boarded the quality pre-k train only to threaten to derail it in this, the first week of PA’s budget process.

Last week, the PA House of Representatives passed House Bill 218, which includes cuts to programs that prepare the state’s earliest learners for success in school and life, as well as funding only a third of Governor Wolf’s modest $75 million pre-k budget proposal.

Businesses and families who rely on child care programs are in for a rude awakening when they see HB 218 cuts $28 million from last year’s budget, and amounts to $62 million less than the Governor’s proposal.

The cut to child care doubles the number of children on the waiting list for spots—that’s 11,000 more kids! If legislators say they’re for pre-k, how is slashing the very infrastructure for pre-k showing it?

“Pre-k doesn’t just benefit the children fortunate enough to access a high-quality program, it benefits the entire commonwealth,” said the principal partners of Pre-K for PA (of which PCCY is a founding member). “Research shows that every dollar invested in high-quality pre-k returns up to $17 in long-term savings and benefits through reduced costs to our schools and society, stronger earnings potential in our workforce and increased tax revenues supporting a more robust economy.”

It begs the question, if they know pre-k and early childhood investments are proven poverty-fighters, job creators, community builders, and cost-savers, how exactly is voting to slash funding helping those they represent?

Sources tell us at least a few representatives voted for HB 218 merely to keep the budget process moving forward, and not an indication that their commitment to children has dissolved. We must have missed the memo, the newsletter, the press release, the website message, the Facebook post or the tweet that said, “HB 218 screws kids, families, businesses—But we don’t mean it! #PreKforPA .”

If their votes in the legislature are meant to reflect the best interests of their constituents, we don’t think it’s too much to expect that when they vote contrary to the interests of the children and families, businesses, and neighborhoods of the districts they represent, that they explain why.

CLICK HERE: TELL YOUR REP TO INVEST IN KIDS

NOTE: We would be remiss if we didn’t report that HB 218 cuts $815 million from the Governor’s budget proposal (nearly $350 million from Health and Human Services), including $12 million in life-saving NARCAN training for police who are on the front lines of the state’s opioid crisis. It does, however, contain $125 million in new K-12 education funding. 

Jin David Kim is the communications director for Public Citizens for Children & Youth (PCCY) where he oversees all communications activities for the organization.  David is a Toronto-born writer and filmmaker and has worked internationally for major media groups such as the Globe and Mail, Canadian Broadcasting Corporation, International Herald Tribune, and the National Film Board. He has worked in politics and government as well, serving as communications director and political advisor in five election campaigns in Canada where he served as an advisor to Ontario’s Minister of Education and Minister of Culture. In 2008, David moved to Philadelphia and was Media Director for a marketing agency in Old City before being named Director of Communications for the Philadelphia Department of Behavioral Health & Intellectual disAbility Services, the City’s largest agency.

Why Do Rural Legislators Vote for Voucher Programs That Deliver NO Benefits to Their Counties?

April 7, 2017 - 1:04pm

Imagine two Pennsylvania programs that subsidize a mix of the state's most expensive private schools catering to the very rich plus faith-based instruction hostile to those with different beliefs. Imagine, further, that you don't have either kind of school in your rural county, which is served virtually entirely by public schools. Imagine, in fact, that these programs deliver nearly two-thirds of their benefits to metropolitan Philadelphia and Allegheny County and do not deliver a penny to 30 rural Pennsylvania counties. Those programs would surely be dead on arrival in the Pennsylvania legislature, right?

Oh wait, you don't have to imagine. Those programs do exist. As documented in a Pennsylvania Budget and Policy Center report released this week, Pennsylvania's two taxpayer-funded voucher programs have exactly these characteristics. Stunningly, many of the state's rural legislators voted to add another $55 million to these two voucher programs — a 44% percent increasae. Martin Causer, who represents Cameron and McKean Counties, for example, and Matt Gabler, who represents Elk County voted for the increase. You'll have to ask them why, because we don't understand it. (A roll call vote of the House Bill is here.)   The portion of Pennsylvania's Educational Improvement Tax Credit (EITC) program that pays for private school vouchers and the Opportunity Scholarship Tax Credit (OSTC) program now deliver $125 million annually to private schools concentrated in and around the state's two biggest cities. Three quarters of the funds go to religious schools. A significant portion of those funds go to schools that teach creationism and faith-based history and science (i.e., the bible as literal truth). Another chunk of the funds go to private schools catering to the super rich — we took a look at just 23 schools on a list of the most elite 20 schools in the state and/or the five elite schools in Pittsburgh. Every single one of these schools — with an average tuition over $32,000 — received funds. On average, they received a cool half million dollars.   Worse still, the EITC and OSTC programs have a host of other warts that make them lousy public policy. They have no academic or financial accountability. They provide lots of opportunity for diverting taxpayer funds to high pay for executives at the organizations that funnel voucher money to schools and at the private schools themselves. Research shows that vouchers don't improve school performance — in fact, a high-quality recent Louisiana study shows that they reduce achievement in math and reading. Further, the push to expand vouchers is fueled by a false narrative the Pennsylvania and U.S. schools are failing. As our report documents, Pennsylvania schools are within shouting distance of the highest-achieving states and nations.   At the national level, U.S. Senators faced a philosophically similar vote to the proposed expansion of EITC and OSTC in the recent confirmation battle over now-Secretary of Education Betsy Devos. DeVos wants to establish a national program to provide vouchers to religious and other private schools. Republicans Susan Collins of Maine and Lisa Murkowski of Alaska voted against Devos' confirmation because they don't have many private schools in their states and they saw her agenda as irrelevant to their constituents.    Perhaps Senators Collins and Murkowski could come to Pennsylvania to give a little tutorial. Even better, they could take a road show to the 30 rural counties that do not have an organization that gives out EITC funds; or the 40 that don't have one that gives out OSTC funds. Perhaps they could suggest that rural lawmakers fight for the additional funds their rural public schools need from the state to achieve state standards (as shown in this recent Pennsylvania Partnerships for Children study).   Legislating based on what best serves the interest of your constituents — sounds like a great idea. Lets bring it to Pennsylvania. And let's hope rural Pennsylvania Senators have second thoughts about whether the state should expand by $55 million the funds for these voucher programs that are irrelevant to rural areas.

On the PA House GOP Budget Proposal (HB 218)

April 6, 2017 - 2:34pm

The House Republican Budget proposal for 2017-2017 is deeply problematic in six respects. 

First, the proposal does not close the state’s budget deficit, but leaves a gap of close to $800 million. Most of the revenue ideas presented by the House Republican Caucus to fill that gap are similar to the one-time revenues and fund transfers that have failed to fix our structural deficit in the past. The Republicans do not seem to be considering any proposal to increase recurring revenues by fixing our upside-down tax system.

Second, the House Republican budget widens, rather than closes, the state’s investment deficit, especially in education, environmental protection, human services, and community and economic development:

  • Education: It proposes $50 million less for Pre-K education and Head Start than the Governor’s budget, as well as eliminates the $8.5 million safe school initiative.
  • Environmental Protection: It proposes $9 million less than the Governor’s budget for the Department of Environmental Protection, which is already funded more than 30% below the level it was in 2008. It proposes to cut funding in half for the Susquehanna River Basin Commission, Delaware River Basin Commission, and Chesapeake Bay River Basic Commission compared to 2016-2017.
  • Community and Economic Development: It proposes an additional $58 million reduction beyond the $11 million in cuts called for by the Governor. It does not provide any funding for the promising manufacturing and work-force training initiatives proposed by the Governor.
  • Human Services: One of the few bright spots in the budget is that it keeps the new funding the Governor proposed to reduce waiting lists for intellectual disability and autism services. But in other respects, the human services budget is dismal. It proposes an additional $11 million reduction in County Assistance Offices beyond what is proposed in the Governor’s budget; $62 million less in Child Care Services and Assistance than the Governor proposes, as well as the elimination of the Governor’s request to add $9 million for evidence-based home visits; $9 million less in Mental Health and Behavioral Health beyond the reductions proposed in the Governor’s budget. It calls for reductions of $2.8 million in Homeless Assistance and $4 million for Local Health Departments compared to the current year’s budget. And it seeks over $200 million in reductions in Medical Assistance, which are likely to be impossible to attain given our current commitments to providing health care to people with low-incomes and long-term care for our seniors.
  • In addition, the House Republican budget cuts $12 million for the Commission on Crime and Delinquency, funds that would be used to provide Naloxone to police departments so that they can revive people who have overdosed on opioids.

Third, the substantial reduction in Medical Assistance is not the only unexplained, and thus dubious, cut called for in the House Republican budget. It also proposes an unexplained reduction of $95 million, beyond that proposed by the Governor, for state correctional institutions.

Fourth, there are small reductions proposed in almost every government agency, cuts that do not, like the Governor’s proposal, seem to be based on a detailed analysis of how to make government more efficient and effective. Rather they appear to be made willy-nilly, on the unfounded assumption that the same level of government services can always be provided with less funding. Republicans are fond of comparing government to business. And while this is usually not a helpful analogy, in this case it holds true. No one would cut the budget of going business concern in this way.

Fifth, though the House Republicans cannot find funds for critical education and human service programs, they are willing to provide $75 million in new tax breaks for businesses that contribute to private schools through the EITC and OSTC programs. These programs provide funding to private schools with no accountability in a way that exacerbates, rather than reduces, education inequity, while at the same time inappropriately using public money for religious education.

And, sixth, the budget does not call for an increase in the minimum wage.

This is a budget that is unbalanced, not only in a fiscal sense, but in a moral sense. It refuses to raise new revenues from those who don’t pay their fair share of taxes now. And it fails to invest in the education, human service, environmental, and community development programs that are vital not only to working people and vulnerable populations, but to the future prosperity of us all.

A Teachable Moment in the PLCB Debate

April 5, 2017 - 10:23am

Those of us who have been parents or teachers often talk about “teachable moments.” Teachable moments occur when something problematic happens from which we can learn some important lesson.

The bills being considered today to privatize the operations of the Pennsylvania Liquor Control Board (PLCB) give us teachable moments — moments that might help people understand why we cannot simply privatize the Pennsylvania Liquor Control Board without the state losing $300-400 million per year in General Fund Revenues.

HB 991 would create new franchise liquor stores for every 6,000 residents in a county with a minimum of 15 per county. That would create as many as 2,000 new liquor stores — far more than the 601 state stores already in place.

The bill has a provision that is quite peculiar, but ultimately very revealing: it requires the PLCB to sell wine and spirit products to franchise stores for the same price that the PLCB acquired the product from a wine or spirits producer. The PLCB is not only allowed no wholesaler or distributor’s markup on what it sells franchise stores, it is not even allowed to recoup its overhead costs for receiving product from distributors and delivering it to franchise stores.

As a result of this provision in the law, the PLCB will be subsidizing franchise stores, reducing the profits it returns to the state budget each year. That means, first, that this law is designed not only to open new retail stores, but to undermine the PLCB and take us one step closer to complete privatization of its operations.

And second, it shows that this step by step undermining of the PCLB does not move us closer to what proponents of privatization say they want — free market capitalism — but instead, it is a form of crony capitalism, in which the private owners of wholesale and retail liquor operations get favors from the state.

Will anyone be surprised if part of this deal turns out to involve the politicians who support it receiving rewards from the cronies they benefit?

This peculiarity of the legislation not only points to the bad faith of the privateers, but if we see why it is in the legislation, we will understand something important about the existing system of liquor sales in Pennsylvania — the state will lose an enormous amount of revenue from liquor sales if the PLCB is totally eliminated.

To see this, you need to understand why the privateers can’t allow the PLCB to pass along even a wholesale markup, as is done in almost every industry and would surely be done if the PLCB were privatized.

The answer is that the PLCB’s markup on liquor prices is far lower than that received by wholesalers and retailers in other states. The PLCB is both the wholesaler and retailer of wine and liquor and its markup over the price it pays its suppliers is about 30%. The wholesaler markup for wine and liquor in other states typically runs from 18-25%. But the retail markup is typically 33-50%. So the total markup when liquor and wine is sold by private businesses is typically 51-75%.

Given the low markup of the PCLB in both wholesale and retail, in order for franchise stores to be make the usual retail markup, they can’t pay the PLCB any markup at all and still have competitive prices. 

Why is the PLCB markup so low? The answer to that question brings us to a critical point for understanding the impact of the PLCB on state finances: Pennsylvania has among the highest liquor taxes in the country. Those liquor taxes are made possible in part by the PLCB’s low markup. And it is those higher liquor taxes that generate substantial revenues for the General Fund.

It’s difficult to see how high our taxes are because Pennsylvania never instituted the kind of gallonage tax that other states have — that is a tax per gallon of wine and spirits sold — and has kept in place the 18% tax on liquor sales, known as the Johnstown Flood tax. In 2017-2018, taxes on alcohol are projected to bring in $413 million. (Profits from the operation of the PLCB are projected to total another $185 million.)

It’s not straightforward to compare the 18% tax to the gallonage taxes found in other states. The best attempt to do so is in an excellent report written by Nathan Lutchansky. Lutchansky is a supporter of privatization, but an honest one who recognizes that the costs to the state of privatization will be substantial.

Lutchansky makes a rough comparison by dividing the number of gallons sold into the total tax take for both wine and spirits. (His report uses Pennsylvania sales data from 2010-2011. We will update it soon. But there is no reason to think that Pennsylvania alcohol taxes at a per gallon rate have changed much. Indeed, as prices increase, our tax per gallon has no doubt increased.)

Pennsylvania’s tax on wine in 2010-2011 was roughly the equivalent of a tax of about $5.08 per gallon. The national average in 2016 was 94 cents per gallon, and in New York it was 30 cents per gallon. Our tax on liquor was roughly the equivalent of $9.60 per gallon in 2010-2011. That national average in 2016 was $7.30 per gallon and in New York it is $6.64 per gallon for liquor over 24% in alcohol strength.

Our taxes are far higher, but our liquor and wine prices are comparable to other states. How is that possible? The answer is what we saw above, the PLCB's markup is far lower than the usual combination of wholesale and retail markup.  

The PLCB system has a much lower markup than private business can accept. And that makes it possible for the state can tax liquor at higher rates. What that means, however is if the state hands wholesale and retail liquor sales to the private sector, if we continue the step by step dismantling of the PLCB system, the state will have to dramatically reduce its liquor tax, costing the state hundreds of millions of dollars in revenue. Either liquor taxes come down or liquor prices will rise far higher than those in neighboring states. And which will reduce sales substantially and lead to a public outcry against privatization.

The proponents of liquor privatization tell us that we can have complete privatization of liquor sales and still generate the yearly revenues the current system contributes to the General Fund. That’s simply not true. This legislation shows us the truth: privatization not only would cost the state the profits of the PLCB ($185 million in 2017-2018), but it will force us to cut our liquor taxes ($410 million in 2017-2018), by up to half. The cost to the state of complete privatization would thus be roughly $300-400 million a year.

In recent years, the General Assembly has balanced the budget by borrowing from the future. Balancing the 2017-2018 budget by moving closer to dismantling the PLCB is budget gimmickry on steroids. It will help close the deficit this year at the cost of generating larger deficits every subsequent year.

UPDATE: April 5

HB 991 was amended in committee to allow the PLCB to add a 15% markup to what it would charge the new franchise stores. This improves the bill from one point of view: the PLCB won't be subsidizing the franchise stores. But it raises other questions and creates a dilemma. On the one hand, it's not clear whether people will step forward to buy franchise licenses if, after paying the PLCB markup, they can only markup their products by another 15% before becoming uncompetitive with state stores. On the other hand, if franchise stores cannibalize state stores sales, then the PLCB will be securing less revenue for the state budget, and putting the PLCB at risk. 

Either way, the fundamental point of this essay remains true: we can't privatize the wholesale and retail operations of the PLCB without threatening an importance source of state revenues. 

 


 

KRC on U.S. Senate Action to Prevent Cities from Improving Retirement Security for Private Sector Workers

March 31, 2017 - 4:39pm
We issued the following statement in my name this week in response to the U.S. Senate vote on H.J. Resolution 67 blocking a rule that would make it easier for cities to help private-sector employees save for retirement.   You can listen to the PBPC podcast about this issue here.   “Earlier today, Pennsylvania Senator Pat Toomey joined all but one member of the Republican Majority in the U.S. Senate to block large cities such as Philadelphia, New York, and Seattle from empowering employees of private-sector companies to save for retirement. Sen. Toomey and his colleagues made clear that they stand for the Wall Street financial firms who charge bigger fees to individuals who set up retirement savings plans on their own. Sen. Toomey and his colleagues stand against the Main Street retirees that would benefit when big cities bargain lower fees from financial services vendors and use competitive bids to select high-quality savings options.

"The passage of House Joint Resolution 67 repeals a U.S. Labor Department rule enacted last year. The rule eliminated a legal grey area so that big cities could make it easy for the half of private-sector workers who have no retirement plan through their job to set up a retirement savings account. About three million Pennsylvania workers, and hundreds of thousands in Philadelphia, have no retirement plan through their job.

"Sen. Toomey is out of step with Republicans in Philadelphia (City Councilman Al Taubenberger) and his own Lehigh Valley area (state Senator Pat Browne) who want Philadelphia and Pennsylvania to join the national movement to promote individual responsibility by empowering people to save for retirement (as explained in this op-ed ed board memo , and blog post ).

"Sen. Toomey and his colleagues have one more chance to get this right and to side with Main Street savers not Wall Street financial firms. A companion H.J. Res. (66) has not yet been voted on and could up for a vote at any point in the next month. We strongly urge Pennsylvania editorial boards and citizens to weigh in with Sen. Toomey to oppose the Paul Ryan small savers' tax and vote no on H.J. Res. 66.

"With his vote today, Sen. Toomey today stood against the Philadelphia Chamber of Commerce ( see their letter in opposition here ), Small Business Majority AARP , and many others. He stood with financial services firms, the U.S. Chamber of Commerce , the Trump White House and every single one of Pennsylvania’s 13 Congressional Republicans, who voted for H.J. Res 66 and 67 Feb. 15. In the Senate, Republican Sen. Bob Corker from Tennessee voted against H.J. Res 67, joining all Democratic Senators, including Sen. Bob Casey."

Essential Benefits Are... Essential

March 24, 2017 - 8:31am

The ACA repeal effort failed in the House on Thursday. But it will be voted on today. 

And the bill keeps getting worse and worse — and that one particular way in which it got worse today may ultimately kill it, even if it passes the House today. 

recent report by the Center for Budget and Policy Priorities, points to some of the ways the bill that emerged on Thursday morning deepens cuts to health care:

"The updated version makes additional changes to Medicaid that are even more damaging overall, including giving states the options to: convert their Medicaid programs into block grants; impose onerous work requirements on adult beneficiaries who are not elderly, disabled, or pregnant; and freeze enrollment in the ACA’s Medicaid expansion starting in 2020. These provisions would likely add to the millions of people who would have Medicaid coverage under the ACA but would become uninsured under this legislation."

I want, however, to focus on one somewhat arcane aspect of the deal that President Trump offered the right wing Republicans today in order to secure their votes for the proposal. Trump offered to repeal the essential benefits requirement for health insurance.

This proposal is, for two reasons, utterly incompatible with a decent health insurance system. And, as I point out at the end of this post, it’s not likely to be acceptable to Senate Republicans, not least because including it in a health care plan considered by the Senate this year would violate Senate rules.

Under the ACA, all health insurance plans must cover ten essential benefits:

• Ambulatory patient services (doctor’s visits)

• Emergency services

• Hospitalization

• Maternity and newborn care

• Mental health and substance abuse disorder services, including behavioral health treatment

• Prescription drugs

• Rehabilitative and habilitative services and devices

• Laboratory services

• Preventive and wellness services, and chronic disease management

• Pediatric services, including oral and vision care

Republicans argue that requiring these benefits in all plans makes them more expensive than they might otherwise be. And that is, in fact, somewhat true. But if one thinks through how health insurance works, it will be obvious that this requirement is essential to good health insurance and absolutely necessary in any health insurance system in which individuals receive a subsidy or tax credit from the federal government to purchase health insurance – which is how both the ACA and the Republican plans are work.

All (Real) health insurance is communal

Health insurance only helps us and is really insurance if we agree to share the costs and risks of illness. So when Republicans complain that the ACA requires people to pay for some benefits they may not use, they are showing that they simply don’t understand what insurance is.

I pay every year for car insurance, including all those years when I don’t have a car accident. My car insurance payments cover the benefits received by others who do have accidents. Does that mean my money is wasted? No, because I’m paying to have some of the money that other people pay for their insurance available to me if I need it. And thus, I am relieved of the worry and stress of the possible costs to me of getting into an accident.

(And yes, what we pay for car insurance varies depending on how likely we are to get into an accident given our driving record, just like what we pay for health insurance varies on whether we smoke. But very little other than smoking—or choosing our parents—determines the likelihood of our getting sick or not.)

So I benefit if I have health insurance even if I don’t use it. And I should pay for that benefit because what other people pay for their insurance will cover my health care bills if I do need care.

Now imagine what would happen if we didn’t require everyone to purchase insurance that provided for these essential benefits.

Insurance companies would offer limited polices that didn’t cover a lot of health care costs. Many people would buy them. Some would do so because they didn’t read the fine print and didn’t recognize how limited the policies were. Others would do so because they aren’t thinking ahead about the risks they are running by buying limited policies – say, policies that don’t cover prescription drugs or mental health care. Some would do so because they can’t afford anything better.

Whatever the reason, the more people who opt out of comprehensive health insurance policies, the more expensive they will become since the only people who always get such insurance are people who are already sick. And as these policies become more expensive, even more people will drop them.

Then, pretty soon, no one will have good, comprehensive insurance because no one will be able to afford it.

And that assumes any health insurance companies actually selll comprehensive individual plans. For most of them won't want to do so beause they will only be bought by people who are unhealthy. And that's precisely who insurance companies do not want to insure. 

Allowing people to buy inadequate health insurance policies that don’t meet minimal standards isn’t a way of tailoring health insurance to the needs of individuals. It is a way of undermining the very notion of health insurance. There is no such thing as health insurance tailored to individual needs. By its nature, health insurance is a communal good.

When Republicans say they want us to make our own decisions about what health insurance we buy, they show that they don’t understand what health insurance is.

The only way to make sure we all can afford comprehensive health insurance is, first, to make sure we all buy a policy that is comprehensive and, second, to give people who can’t afford such a policy subsidies or tax credits to buy it.

And that’s what the ACA model does. The only alternative to the ACA model that works is single payer, which is another communal form of insurance.

If we provide credits for insurance, we must have an essential benefits requirement

That we provide tax credits under the ACA – and would do so in a much more stingy way under the Republican plan – is another reason we need a list of essential health benefits.

Again, imagine what could happen if we didn’t have those required benefits. A twenty year old who got a $2,000 tax credit for health insurance could buy a policy that costs $2,500 a year that covers only one kind of treatment, medical marijuana. Your tax dollars would insure that this young man stayed perpetually high.

That’s a joke, but it points to a fundamental truth. If we are going to subsidize the costs of health insurance communally – and, as we have seen, there is no alternative – then there has to be some regulations on what we pay for. No one wants our tax dollars used for health insurance that only covers one remedy. (Nor would we want our tax dollars to be used for insurance that only supports many remedies if they are all recommended by quacks.)

Finally, repealing the essential benefits provision make a mockery of the requirement that insurance companies insure people  despite their pre-existing conditions. Even if insurance companies are required to offer everyone the same policy without adjusting the cost based on an individuals health status, the only policies they offer that cover costly medical conditions will be extremely expensive. 

So, any real health insurance program can’t get rid of a list of essential benefits that all insurance must meet.

While the far-right Republicans in the House doesn’t understand how insurance works, most Republican Senators do understand it. So I don’t think they would ever vote for a proposal that eliminates the essential benefit requirement. So if an ACA repeal bill ultimately passes the House that eliminates essential benefits, it would run into a Senate road block. If the Senate passed a bill that maintained the essential benefit requirement, an extremely difficult set of negotiations would be required to reconcile the House and Senate bills.

The essential benefits package can’t be removed under reconciliation

But, we are not likely to get to that point, and not only because the House can’t seem to pass an ACA repeal bill and the Senate won’t pass one that takes away the essential benefits requirement. There is a further problem: Republicans can’t legitimately enact a law to remove the essential benefits requirement under the reconciliation procedure they have to use in the Senate to pass the AHCA without any Democratic votes.

To remind you: under normal procedure, an ACA repeal or replacement bill would face a Democratic filibuster and would need 60 votes to be enacted in the Senate. Republicans, however, only have 52 Senators. So they have chosen to try to enact the ACA replacement through a procedure called “reconciliation” that is part of the budget process. Under this procedure, no filibuster is possible and only 51 votes are need to pass legislation. But there is one caveat. Under the Byrd rule, such legislation has to have U.S. budgetary implications.

Changing or removing the essential benefits package would have no such implications and, thus, it can’t be part of legislation enacted through reconciliation.

Republicans are talking about finding a new interpretation of the Byrd rule that would allow them to use reconciliation to remove the essential benefits package. Following this path, however, would be the greatest violation of Senate rules of procedure in the history of that body. It would be, and would be seen by any fair-minded observer of our politics, and certainly by any Democrat, as a despicable act, that contravenes the basic norms of our politics.

Republicans have pushed the limit on observing the rules of our politics, for example, by denying the nomination of Merrick Garland a vote. But violating the Byrd rule would be an unprecedented violation of those rules that would create total warfare between the parties in Congress.

I can’t imagine the Senate majority leader, Mitch McConnell, taking such an action. And I can’t imagine how much more divisive and broken legislative politics would be if he did so.

So, as a matter of politics and policy, the deal Trump offered the right-wing Republicans in the House makes no sense.

The right wingers don’t get the policy. But they get the politics and know that what Trump offered can’t get through the Senate. And that’s one reason the Republicans are stuck today.

(Another is, as I put it, somewhat facetiously on Facebook today, the current bill doesn’t cause enough people to lose their health insurance to satisfy the far right.)

Repeal of the Affordable Care Act: A $31 billion tax cut for a handful of the wealthiest taxpayers

March 20, 2017 - 3:34pm

In Pennsylvania, the top 1% of families have captured just over half of all the growth in market incomes between 1979 and 2013 (Figure A above). As we have argued, this imbalance is largely the result of policy choices that have favored financial executives and CEOs over working families.

Now, Congressional Republicans have proposed eliminating the net investment tax and additional Medicare tax, which were enacted to pay for the Affordable Care Act (ACA). The Institute on Taxation and Economic Policy has estimated that 86% of these tax cuts would flow to the top 1% of families (Figure B above).

The Affordable Care Act provides critical access to health care to over a million Pennsylvanians, with a portion of that extended coverage paid for by high-income families, the primary beneficiaries of economic policy in the last 36 years.  We think that's a fair tradeoff.

Trump Budget Slashes State and Local Grants at Tough Time for States

March 20, 2017 - 1:59pm

This post, written by Iris J. Lav, originally appeared on the Center on Budget and Policy Priorities blog on March 17, 2017. You can view the original post here.

President Trump’s new budget would push huge additional costs to states at a time when most of them lack the revenue to pay for current services.  Low-income families would be particularly hard hit, as the budget eliminates or deeply cuts funding for a wide array of state programs and services that help these families overcome hard times and rise into the middle class. 

The budget includes roughly $18 billion of specific cuts in federal discretionary (annually appropriated) grants to state and local governments for fiscal year 2018. Among the state and local programs it would eliminate or sharply cut are more than $3.9 billion in K-12 education grants that, among other things, promote more effective teaching and support after-school enrichment programs.  It also cuts $4.2 billion by eliminating both the Low Income Home Energy Assistance Program, which helps low-income households, including many poor seniors, pay for heat, and the Community Services Block Grant, which provides anti-poverty services through states, localities, and nonprofits. 

In addition, the budget eliminates two important housing block grants, reducing funding by another $4.2 billion: the Community Development Block Grant, which rehabilitates affordable housing and supports related services in low-income neighborhoods, and the HOME program, which develops and preserves affordable housing.  It also includes other specified cuts in environmental, job training, and emergency readiness grants.

Overall, the budget cuts non-defense discretionary (NDD) spending — outside Veterans Affairs and Homeland Security, the two non-defense departments that the budget would increase — by 15 percent.  Since support for state and local programs makes up a significant portion of NDD spending, there will undoubtedly be additional cuts to state and local grants outside those that the budget specifies.  This part of the budget is already at very low levels in historical terms, with discretionary grants to states and localities totaling just over 1 percent of gross domestic product.

The President hasn’t specified his plans for state and local grants that lie outside of NDD, but he supports a House bill that would eliminate federal funding for the Affordable Care Act’s Medicaid expansion over time and cap federal funding for all of Medicaid, thereby shifting costs to states and forcing large and growing cuts to the program over time.  States rely on Medicaid to provide medical services to low-income people who can’t afford needed care. 

This is a bad time to shift large new costs to states.  Despite the relatively healthy economy, two-thirds of states face a revenue shortfall either this year or next.  Mid-year 2017 shortfalls equal $16 billion and projected 2018 shortfalls total $30 billion. The President’s budget justifies several of its cuts by stating that states or localities could better provide the services but, without adequate resources, that’s highly unlikely.    

 

Iris J. Lav is a Senior Fellow at the Center on Budget and Policy Priorities

Health care must be provided communally

March 19, 2017 - 4:53pm

This piece originally ran in Newsworks on January 26, 2017. You can find the original here

Every once in a while, when I write something in defense of the Affordable Care Act, or point out, as the Pennsylvania Budget and Policy Center recent reported, that repealing it will lead 1.1 million Pennsylvanians to lose their insurance and 3,425 to die each year as a result, someone comments, “I pay for my own health insurance. Why should I pay taxes for anyone else’s?”

I often ignore those comments for two reasons. First, unless the writer has an individual income over $200,000, or a family income over $250,000, he or she is not paying taxes for the ACA. And, second, if someone doesn’t share the notion that we all have a moral responsibility to guarantee that everyone has access to high-quality, affordable health care, I’m not sure what I can say to change their mind. If Matthew 25, where Jesus proclaims “I say to you, as you did it to one of the least of these my brothers, you did it to me,” can’t convince them, what can I say that will move them?

But there is another, slightly more complicated, way to look at this issue that might do so. No one really pays for their own health care in the United States or any other advanced country. Health care is always provided in large part by social insurance.

Consider that:

1. The federal government spends an enormous amount of money supporting research on health care. That research has led to many new pharmaceutical and surgical treatments for disease.

2. The federal government supports the training of doctors through its support of teaching hospitals and grants and loans to doctors in training.

3. Most of the hospitals in the country, especially in rural areas, would not exist in their current form, or at all, without federal support.

4. And most importantly, the almost 60 percent of people who get health insurance through their employer receive a massive tax break, because unlike their wages, the benefits of receiving health insurance are not taxed. If you have to purchase health insurance on your own, you do it with after-tax, not pre-tax dollars. The cost of that tax break is $250 billion a year, which is 2.5 times the cost of the ACA.

5. And because of that tax break, 60 percent of Americans buy health insurance as a part of a large group, which means that they can secure it even if they have a pre-existing condition.

Why do we have all these programs? Because the risk of serious and costly illness is so severe, yet the likelihood of any of us getting a particular illness is so small, that we simply can't insure ourselves against all possible threats to our health by ourselves. To see that, imagine what health care would look if none of those federal programs that support health care and health insurance existed.

1. There would be no employer-based, group insurance. We would all have to buy insurance on our own. The cost of that insurance would vary with our medical condition. So almost no one with serious medical problems would be able to afford health insurance. Anyone who got a serious medical condition would be dropped from their insurance. That would especially be true for people who have diseases that are unusual or costly to treat.

2. There would be far fewer major medical centers, and none would be found outside our major cities.

3. While there would likely be hospitals and doctors available to treat the diseases that afflict large numbers of people — heart disease, diabetes, COPD, some cancers — there would be little or no financial incentive for doctors and hospitals to develop the expertise to treat unusual diseases or conditions or for pharmaceutical companies to develop drugs for them. That would, by the way, include the majority of diseases, including the majority of cancers.

4. Private research institutes and drug companies would have little incentive to undertake the risky research that sometimes leads to a medical breakthrough, but often leads to knowledge that brings no immediate financial return.

Social insurance, in which we as a community take on a large part of the cost for uncertain research, hospitals, and physician training, and provide the subsidies for health insurance, is the only way we can guarantee that all of us have access to high-quality, affordable health care.

The ACA isn't the first program that asks people to pay for health care of for other people (as well as themselves). It is, however, the one that extends the full benefits that 85 percent of our fellow citizens already receive from our taxes to the 15 percent who do not.

If you oppose the ACA and are in a very high income bracket, you’re not trying to stop the government from spending your taxes on the health care of other people. That’s already happening. You certainly don't oppose spending my tax money — and the tax money of the uninsured, since they all pay taxes — to pay for your health care. That’s also already happening. What you oppose is using your tax money to help the uninsured take advantage of what we collectively provide to those of us who already have insurance.

The ACA is about including everyone in the social insurance that you and most Americans receive and that all of us already pay for as a community. How dare you tell me that you have no obligation to pay your share?

New Report Confirms Assumptions About PA Coverage Losses Under GOP Health Care Plan

March 17, 2017 - 7:00pm

A new study from the Center for America Progress estimates that 970,000 fewer Pennsylvanians will have health insurance if the GOP health care plan is adopted by Congress. The study also provides detailed estimates for how many fewer people will be covered by Congressional district for each kind of health insurance (traditional Medicaid, Medicaid expansion, marketplace, and employer-based insurance.)

(CLICK THE IMAGE ABOVE TO ENLARGE)

The CAP estimates are broadly similar to those we at PBPC have put forward. However, we believe that the CAP study underestimates the number of Pennsylvanians who will lose insurance under the Medicaid expansion by 2026. The CBO estimates that only 5% of Americans will still have insurance under the Medicaid Expansion by 2026. That estimate, applied to Pennsylvania, would mean that only 35,000 people will remain on the Medicaid Expansion by 2026 in our state, while the new CAP study assumes that 450,000 will still have insurance under the program. That conclusion rests on the assumption that Pennsylvania will pick up some part of the $4-5 billion in costs of the Medicaid Expansion. Given the difficult budget situation Pennsyvlania already faces and the political makeup of the General Assembly, we believe that this is extremely unlikely. Thus, we expect that 555,750 Pennsylvanians will lose health insurance under the Medicaid Expansion program by 2026 which means that the statewide total will be 1.3 million.

Did your state rep vote make Betsy DeVos proud?

March 16, 2017 - 11:00am

The following is a guest post from Susan Spicka, Executive Director of Education Voters of Pennsylvania. It was originally posted on their blog here.

Budgets are about priorities and yesterday 147 members of the PA House made it clear that funding scholarships for students to attend unaccountable private/religious schools is one of their top budget priorities this year. They made school privatizer Betsy DeVos proud.

See how your state representative voted on HB 250.

The PA House voted overwhelmingly in favor of HB 250, which would increase funding for private school scholarships to $180 MILLION/year by providing $55 million in NEW tax breaks for businesses that contribute to the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs. HB 250 also provides an additional $20 million for educational improvement and pre-K organizations (a total increase of $75 million for the EITC and OSTC programs).

Read our Myth busting PA’s EITC and OSTC programs fact sheet to learn more about how these programs funnel tax dollars into private/religious schools with NO fiscal or academic performance accountability.

Before HB 250 becomes law, the PA Senate will need to approve it and then it will need Governor Wolf’s signature or, if he vetoes it, a veto override in both houses. In addition, in order to pay for $75 million in new EITC/OSTC tax credits, state lawmakers will need to either cut $75 million from other programs/services in the budget or raise revenue.

We have time to educate our senators and our communities about these programs through legislative visits and letters to editor in local newspapers to help suppress the appetite for HB 250 in the Senate.

If you are interested in participating in a conference call to learn more about how you can help, click HERE and I will contact you with more information.

Let’s put HB 250 in perspective in terms of funding for PA’s K-12 students.

Governor Wolf’s budget proposes a $100 million increase in Basic Education Funding and a $25 million increase for special education funding for a total of $125 million. His budget also proposes a $50 million CUT in funding for student transportation, leaving a net $75 million increase in the 2017-2018 budget for PA’s K-12 public school students.

The PA House voted for a $55 million increase in funding for private/religious school scholarships.

Lawmakers have a constitutional obligation to fund a “thorough and efficient” system of public education in Pennsylvania. PA has the most inequitable school funding system in the nation and school districts throughout the Commonwealth continue to struggle to offer students even the most basic educational opportunities because state funding is inadequate.

A majority of PA state representatives voted to provide $55 million in new funding for unaccountable private/religious schools that educate about 250,000 students. These private/religious schools can discriminate against student for any reason and are NOT obliged to enroll any new students or any students living in poverty if they receive new EITC/OSTC scholarship money. The current budget proposal would provide just $75 million additional dollars for more than 1.7 million students who attend PA’s public schools.

Let that sink in. This is what the privatization of public education looks like.

Please fill out this form if you are interested in participating in a conference call to learn more about how you can help push back against our state government funneling more tax dollars into private/religious schools through the EITC/OSTC programs and read our fact sheet Myth busting PA’s EITC and OSTC programs.

Listen to our interview with the Public News Service about HB 250 HERE.

PBPC on CBO Score for GOP Healthcare Plan

March 13, 2017 - 7:29pm

Marc Stier, Director of the Pennsylvania Budget and Policy Center, made the following statement following the release of the Congressional Budget Office (CBO) scoring for the "American Health Care Act," the GOP House healthcare proposal:

The Congressional Budget Office released its evaluation of the Republican replacement for the Affordable Act (ACA), the American Health Care Act (AHCA) today and, not surprisingly, the news is grim for the nation, and by extrapolation, for Pennsylvania.

The most disturbing information in the new report is the prediction that 24 million Americans will lose health insurance by 2026. That high number reinforces our tentative estimate that at least 1.1 million Pennsylvanians, and probably more, will lose health care coverage when the AHCA goes fully into effect. It also lends support to our view that 4,000 Pennsylvanians will die prematurely because a lack of insurance will make it impossible for them to get the health care they need.

The CBO report does predict that health insurance premiums in the individual market will grow more slowly under the AHCA than currently projected. Yet, the reason for that slower growth is troubling: The repeal of the actual value requirements of the ACA will mean that health insurance typically covers less of the cost of health care, leading to higher out of pocket costs. And while the CBO predicts that premiums will be 20% lower for a 20 year old, and 8-10% percent lower for a 40-year old, they will be 20-25% higher for a 60 year old. This is bad news for Pennsylvanians, in part because, as we pointed out last week, the tax credits for purchasing health insurance on the exchanges in the AHCA are far less generous than those in the ACA and do not grow with the cost of health insurance. We now estimate that the average person receiving tax credit in Pennsylvania will see their credit reduced by 43% or $2,188. The tax credit reduction will be far higher for people who are older—precisely the group whose premiums will increase as a result of the AHCA. For example:

  • In Philadelphia, a 60 year old with an income of $40,000 will see a decline in their tax credit from $8,470 to $4,000.
  • In Centre County, a 60 year old with an income of $40,000 will see their tax credit decline form $10,700 to $4,000.

Finally, the CBO predicts that, once the incentives in the ACA for businesses to insure their employers are eliminated, seven million people who now get employer-based insurance in the country will lose it. This will be especially problematic in Pennsylvania, which has the 9th highest rate of employer-based insurance of all 50 states. Our rough estimate is that 300,000 people will lose employer based insurance in our state.

Did I Miss a Contribution from the Arnold Foundation to the New York Times?

March 9, 2017 - 4:47pm
Over the past half-dozen years, former Enron billionaire John Arnold has spent up to $50 million for research and communications aimed at eliminating guaranteed pensions for public sector workers.   Much of this money has gone to pillars of liberal America, such as the Pew Trust, the Urban Institute (recipient of almost $15 million), and even public television (which gave $3.5 million back as reported in The New York TimesLA Times, and by the PBS Ombudsman).   Given this background, when I read this New York Times story on public pensions today, the first thought that popped into my head: did I miss a contribution from the Arnold Foundation to The New York Times?   The Times story by Mary Williams Walsh relied on research and quotes from the Urban Institute's Richard Johnson, funded by Arnold. Johnson specializes in studies that use overgenerous assumptions about the returns to nontraditional pensions (401(k)-style savings plans and Cash Balance plans). These assumptions make it seem like most teachers benefit from the end of guaranteed pensions. But the assumptions are inconsistent with the facts showing that traditional pensions have higher returns, lower fees, and lower-cost annunities than 401(k)-style savings accounts. As well as Johnson, The Times story cites five other researchers, all on the same side in the public pension debates. So much for journalistic balance.   More insidious, Walsh's story fuels the narrative that the public sector pension issue is a case of a transfer from younger workers (and taxpayers) to older workers (to pay for unfunded pensions) — what self-proclaimed free-market think tanks like to call "intergenerational theft."    Actually, the crisis of public sector pensions is another aspect of the rising economic inequality that exists in every state. Despite this inequality and record corporate profits, states give away enormous amounts of revenue in unaffordable corporate tax breaks. Most states also have low tax rates on those with high incomes — and fail to capture needed revenue achievable by taxing the top at higher rates. This double whammy of low top-end tax rates and expensive corporate giveaways means states don't have the money for education, infrastructure, and other essential services — or to make required contributions to public sector pensions. The failure to make those contributions is the main reason pension systems end up with significant debt.   Here's another way to see that economic inequality, or what you could call "intragenerational theft," which is the real problem faced by workers of all ages, including young teachers, nurses, firefighters and private sector workers of all stripes. I'm going to use numbers from Pennsylvania, but the basic idea generalizes. In Pennsylvania, the richest 5% received about three quarters of the increase in income in the state between the late 1970s and 2012-13 (the latest state numbers available). As a result, the bottom 95% receive about $50 billion less in income each year than if the increase in Pennsylvania income was distributed the same way as 1979 income. Even though Pennsylvania is a state with a big pension debt, that $50 billion is almost as big as the cumulative debt of Pennsylvania's two big state pension plans (about $57 billion), which can be paid back over 30 years. To be sure, paying back that debt is a genuine public policy challenge. But the real threat to the future pensions of young teachers, and to the future wages and benefits of all young workers, private and public, is that the benefits of economic growth in future decades will be as skewed to the top as they have been since 1979.    If John Arnold would put his money, and Mary Williams Walsh her journalistic energy, into calling attention to economic inequality, maybe they could actually help young teachers. At the moment, whatever stories they tell themselves, they are distracting policymakers and the public from the real source of economic struggle for the middle class. They are also diviiding workers public and private, young and old, from one another. And if Walsh has no interest in anything but propagating a distorted, Arnold-financed world view, perhaps it's time for The New York Times ombudsman to take a closer look at her reporting.

Analysis of Effects of House GOP Health Care Plan on Pennsylvania

March 7, 2017 - 11:24am

The following is an analysis of how the recently-released House GOP proposal, the "American Health Care Act," would affect Pennsylvanians:

The health care legislation introduced by the House Republicans late yesterday is a devastating and dishonest attack on not only the Affordable Care Act, but on the Medicaid program. When fully implemented, it will have horrible consequences not only for the health of low- and moderate- income Pennsylvanians, but on long-term care for all but our wealthiest senior citizens.

We will be providing a thorough analysis of the legislation soon. But our preliminary analysis suggests that when the program is fully implemented, around 1 million low- and moderate- income Pennsylvanians will lose health insurance; the state budget will lose at least $2.5 to $3 billion in funding; at least 60,000 Pennsylvanians will lose their jobs, and over 4,000 Pennsylvanians per year will die prematurely.

Some key points:

  • The bill would end new enrollments in the Medicaid Expansion program in 2020. Because incomes rise and fall, by the end of five years, most of the almost 700,000 Pennsylvanians who received health insurance through the Medicaid expansion will lose it. Our preliminary estimate is that the reduction in federal spending in Pennsylvania on the Medicaid expansion will be roughly $4 billion per year.
  • The bill would create per-capita caps on traditional Medicaid spending. Because those caps do not take into account changes in the age and health status of Medicaid beneficiaries or above average increases in health care costs due in part to the development of new and costly procedures and pharmaceuticals, federal support for Medicaid will decline by a huge amount. That will cost Pennsylvania another $10 billion to $15 billion over ten years or $1.1 billion to $1.5 billion per year.
  • The bill would have a devastating impact on Pennsylvania’s state budget. To maintain traditional and expanded Medicaid would cost the state roughly $5 billion per year. Even if the state declines to support expanded Medicaid, Pennsylvania-specific health care programs already on the books are required to pick up some of the those who lose insurance. That cost to Pennsylvania will be $1.1 billion a year. Thus, even without continuing to pay for expanded Medicaid, the state will need $2.6 billion to $3.0 billion a year to maintain traditional Medicaid.
  • The bill would force states, most likely including Pennsylvania, that are unable or unwilling to make up the difference in federal support for traditional Medicaid to reduce Medicaid benefits. Eligibility for the program will be restricted, and coverage of medical procedures will be limited. Waiting lists will be created. Work requirements, that have little or no impact on work effort, but create additional paperwork that make it hard for people to secure benefits, will be created.
  • The bill would force states to reduce Medicaid support for long-term care, which currently benefits middle-income as well as low-income seniors.
  • The bill would replace the tax credits in the Affordable Care Act—which are adjusted for income and for the cost of health insurance—with new fixed tax credits that vary only with age. This shift benefits those who are younger and have higher incomes while hurting those who are older or have lower-incomes. Most of the 321,000 Pennsylvanians who use tax credits to purchase health insurance on the health care exchange marketplace will be able to afford insurance under the Republican proposal.
    • We estimate that in Philadelphia, for example, a 40 year-old who has an income of $20,000 will see their health insurance tax credit decline from $4,950 to $3,000. The tax credit for a 60 year-old at the same income level would drop from $11,600 to $4,000. But a 40 year-old with an income of $40,000 will see a tax-credit increase from $1,830 to $3,000 and a 40-year old with an income of $75,000 who does not receive a tax-credit now will get one of $3,000.
    • In Centre County, a 40-year old with an income of $20,000 will see their tax credit decline from $4,950 to $3,000. A 60-year old with an income of $40,000 will see their tax credit drop from $10,700 to $4,000.
    • Similar results will be found in other parts of the state.
  • Tax credits under the Republican plan, unlike those under the ACA, do not increase as the cost of insurance goes up. And we expect dramatic increases in the cost of insurance in the individual market. The "death spiral" that Republicans keep expecting in the ACA will become a reality in many markets, most likely including some in Pennsylvania. Because the individual mandate will be abandonded, and the penalty for securing insurance after a break are quite small, young, healthy people will not purchase health insurance, forcing costs dramatically up, leading others to drop their insurance. In many cases, the relatively small tax credits in the GOP plan will not make up for those increased costs. 
     
  • The only health insurance that will be cheaper will be health insurance that covers less an dthat has far higher  deductibles and  co-pays as ACA rules for health insurance are abandoned.
  • The loss in federal funding in the bill would cost Pennsylvania at least 40,000 jobs, not only in the health care field but in other areas as well.
  • We estimate that there will be at least 4,000 pre-mature deaths per year in Pennsylvania when the program is fully implemented in 2025.

The bill would lead to an increase in health insurance costs in the individual market as younger and healthier people delay getting health insurance until they become sick. The new tax credits for those with moderate incomes may not even offset the increase in health insurance costs.

Enactment of this proposed legislation would be a shameful episode in our history, as we turn our backs on providing health care and long-term care for millions of Americans and Pennsylvanians.

On Retirement Security, Senators Casey and Toomey, Which Side Are You On?

February 26, 2017 - 7:15pm

There's another "which side are you on?" issue under consideration in Washington D.C., and it could come before Senators Casey and Toomey in a vote as early as this week.

The issue is retirement security in the private sector.

Every one of Pennsylvania's 13 Republicans in the U.S. House of Representatives has already spoken. They are against it—retirement security in the private sector that is. That means they are also against Main Street and for Wall Street. Good to know. 

This week (or soon), unless Senate leaders have second thoughts, we will find out which side our U.S. Senators are on.

Here are the details. Over several decades, retirement security in the U.S. private sector has collapsed. Today, according to the Requirement Equity Lab at the New School for Social Research, more than half the workforce nationally—87 million workers—do not have access to a retirement plan at work, not even a lousy 401(k) plan. In Pennsylvania alone, 3.3 million workers do not have access to a retirement plan at work.

Recognizing the need do SOMETHING to bolster private sector retirement security, a Washington state think tank over 15 years ago began advocating having states make it possible for workers at businesses with no retirement plan to have a retirement savings account. Recognizing a good idea when we saw one, we advocated this concept in 2002 (see p. 56 of The State of Working Pennsylvania 2002). A legislative staffer adapted the Washington state legislation into a Pennsylvania bill that was introduced for several legislative sessions, but never passed.

In the last five years, the common-sense idea that states should make it possible for private sector workers to save for retirement has gathered momenum. California, in 2012, and now four other states (Oregon, Illinois, Connecticut and Maryland) have begun to study, and set up, so-called "Secure Choice" or "Retirement Security for All" plans. The city of New York and Philadelphia are also exploring such plans. Philadelphia City Council has a Task Force on the Retirement Security of Private Sector Employees, which is developing recommendations, co-chaired by Democratic council member Cherelle Parker and Repulican Bill Taubenberger. (Full disclosure: I'm a member of the Task Force.)

The first operational state plans will give private workers who currently have no retirement plan access to "individual retirement accounts" that include no employer contributions. Workers will automatically contribute, unless they explicitly opt not to do so. Making the default that workers contribute can increase participation rates to over 90%, compared to low participation in traditional 401(k) plans under which the default is that workers do not contribute.

These plans are not a panacea for middle-class retirement insecurity—it's hard to save enough for retirement with no employer contribution, especially for moderate-income workers. But these plans are a start.

The Obama Administration gave a green light to states and big cities taking the initiative on private sector retirement last year by enacting new U.S. Department of Labor regulations. These regulations clarified how states and cities can set up plans in coordination with the federal ERISA law. The regulations confirmed that businesses that offer Individual Retirement Accounts (IRAs) as part of mandatory state/city programs are exempt from ERISA requirements.

With other states providing a model, and with the new federal regulations, interest in retirement security for all plans has increased in the Pennsylvania legislature. A co-sponsorship memo is being circulated in the Pennsylvania Senate by Republican Pat Browne and Democrat Art Haywood and staff members of House members are also gathering information on the models in other states. In late 2015, a member of the Republican leadership in the Pennsylvania Senate referred to this basic approach as a "no brainer," addding "who could be against it?"

Who indeed?

Answer: the 2017 Republican majority in the U.S. House of Representatives.

On February 15, 230 of the 246 Republican members of Congress voted to block the Obama regulations (three voted no, five abstained, and six weren't there) on H.J. Res 66, which removes the green light for states to set up retirement plans; 233 voted yes on HJ Res 67, which removes the green light for cities to set up retirement savings plans, with one no, and four abstentions. As noted above, every one of the 13 Pennsylvania Republicans in Congress voted in favor of blocking the Obama regulations while the five Democratic members of Congress voted to retain the new regulations clarifying how states and big cities can move forward to empower private workers to save for retirement. 

Even in these polarized times, I found this vote depressing. Among the Republicans we know in Pennsylvania, this is a very bipartisan idea. It is consistent with ideas of self-reliance—you're making it easier for people to use their own contributions to save for retirement. It's fiscally prudent and should make people less reliant on social programs in retirement. It's consistent with the idea of states' rights. It's also a boon for small business. It relieves them of responsibility for setting up a retirement plan, but still leaves the option of setting up their own if they want to do so. Perhaps this is why 86 percent of small business owners support such plans. Perhaps this is also why Small Busines Majority "urges Congress to uphold the Labor Department's rule and allow states to decide how best to serve their small businesses and private sector workers."

The organizations that want to block states and big cities from empowering more private workers to save for retirement include the U.S. Chamber of Commerce and a coalition that includes securities and financial services firms—to use a shorthand, Wall Street. Feel free to try to decipher the Chamber's arguments yourself. In our view, they are a lot of smoke and mirrors (reiminiscent of the arguments made by payday lenders in Pennsylvania for the past several years).

The real objections? It's possible that the right-wing business lobby doesn't want government doing something (else) helpful to families. Second, states and cities may negoitate lower fees for investment options than individual savers can get on their own. They may also limit the number of investment options so that individuals are not tricked into making poor choices. In both ways, state and local plans may make it harder for Wall Street financial firms to rip off Main State retirement savers. Of course, since these people aren't saving now, these state and city plans will actually create more business for financial firms than no business. But apparently that upside doesn't count for any more with the U.S. Chamber and its allies than the positive impact the state and city initiatives would have on tens of millions of people's lives.

So which side are you on Senators Casey and Toomey?

Main Street or Wall Street?