Almost every conversation about surface transportation finance begins with a two-part question: What are the “needs” of the national transportation system, and how does the nation pay for them? This report is aimed almost entirely at discussing the “how to pay for them” question. Since 1956, federal surface transportation programs have been funded largely by taxes on motor fuels that flow into the Highway Trust Fund (HTF). A steady increase in the revenues flowing into the HTF due to increased motor vehicle use and occasional increases in fuel tax rates accommodated growth in surface transportation spending over several decades. In 2001, though, trust fund revenues stopped growing faster than spending. In 2008 Congress began providing Treasury general fund transfers to keep the HTF solvent….
Source: Bernard Yaros, Regional Financial Review, November 2017
Which U.S. regions would benefit the most from the Trump administration’s spending objectives? This article focuses on the regional impact of shifts in defense spending, veterans benefits, and border security expenditures.
From the press release:
Today, the Rockefeller Institute of Government released a new report, Giving or Getting: New York’s Balance of Payments with the Federal Government, to examine what states gave in tax dollars versus what states got from the federal government.
Modeled off of the “Fisc” reports issued by Daniel Patrick Moynihan, the former United States senator from New York, the Rockefeller Institute of Government report found that:
• Thirteen states had a “negative” balance of payment with the federal government. From worst to least they are: New York, New Jersey, Illinois, California, Massachusetts, Connecticut, Minnesota, Texas, North Dakota, Colorado, New Hampshire, Nebraska, and Wyoming. New York’s residents and economy contributed approximately $48 billion more in taxes to the federal government than New York received in federal spending —- the largest of any state.
• New York’s negative balance of payments roughly equals the combined shortfalls of 2nd ranked New Jersey and 3rd ranked Illinois. California and Massachusetts rounded out the list of top five states.
• On a per-capita basis, New York had the third-worst balance of payments, after New Jersey and Connecticut. New York’s people and economy paid the federal government $2,425 more per person than they received. By contrast, the average state experienced a positive balance of payments of about $1,305 per capita.
• New York’s negative balance of payments is driven primarily by federal taxes, rather than spending. Payments from New York to the federal government were $12,820 per capita, or approximately $3,401 higher than the national average.
• Federal spending in New York was $329 lower than the U.S. average, adding to the revenue disparity, but the revenue difference is much larger than the spending difference. ….
Under the Affordable Care Act (ACA), insurers receive federal payments to cover costs incurred when offering plans with reduced deductibles, copayments, and other cost sharing to some people who purchase plans through the ACA marketplaces.
If those payments for cost-sharing reductions stopped after the end of this year, participating insurers would raise premiums to cover the costs. CBO and the staff of the Joint Committee on Taxation estimate that ending those payments would increase the federal deficit, on net, by $194 billion from 2017 through 2026, mostly because that change would result in increased costs for premium assistance tax credits. The number of people uninsured would be slightly higher in 2018 but slightly lower starting in 2020….
The share of states’ revenue made up by federal dollars rose in fiscal year 2015, capturing the first full year of expanded Medicaid eligibility in some states. The federal government provided 31.9 percent of 50-state revenue in fiscal 2015—the third-largest share on record—up from 30.7 percent in fiscal 2014.
For a second consecutive year, federal dollars as a share of state revenue increased in a majority of states—29 in fiscal 2015. Health care grants have been the main driver of increases in federal funding to states in recent years.
Federal grants to states rose 10.2 percent in fiscal 2015, outpacing overall revenue growth of 6.3 percent. The $55 billion increase in federal funds boosted the share of state revenue coming from the U.S. government to its third-highest level since at least 1961. The federal share of state revenue, however, was still lower than just after the Great Recession, when an influx of economic stimulus dollars and falling state tax revenue increased the federal share to 35.5 percent in fiscal 2010 and 34.7 percent in fiscal 2011. Declines in the federal share after fiscal 2010 reflected the phasing out of stimulus funds and the recovery of states’ tax collections. Changes in either revenue source affect the ratio of federal to total dollars.
From the summary:
The Community Development Block Grant (CDBG) program is the key tool cities use to revitalize low and moderate-income neighborhoods and serve the people who live in them. Administered by the Department of Housing and Urban Development, CDBG was launched in 1974 and has served thousands of communities across the nation. “Entitlement” communities receive funds directly from the federal government based on a highly targeted formula. The balance of funds go to States which administer CDBG resources to smaller towns and communities on a competitive basis. CDBG allows local governments the flexibility to design their own comprehensive revitalization plans in the context of targeted objectives to serve low and moderate income people. ….
…. CDGB is not just another federal program. It is a lifeline to poor neighborhoods that for too long have suffered disinvestment in both their physical infrastructure and their people. This publication, CDBG WORKS, is designed to illustrate the types of projects CDBG makes possible. CDBG funds housing rehab programs for in-home seniors and those with disabilities, making it possible for them to gain access and stay in their homes. It funds Boys and Girls Clubs to provide youth productive activities as an alternative to the streets. It supports community and social service organizations that provide counseling to victims of domestic violence and those who suffer from homelessness and mental health problems. The list goes on and on. ….
The Trump administration aims to slash spending on the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, by US$193 billion over the next decade. The proposal would also overhaul how the nation’s main nutrition assistance program operates, potentially encouraging additional cuts by the states.
Curbing SNAP’s reach is only one way that Office of Management and Budget Director Mick Mulvaney and other officials are trying to trim the safety net to save taxpayer dollars – while simultaneously boosting military spending.
As an economist who studies nutrition policy, I don’t understand what good the administration thinks it can do by overhauling and paring back an effective and efficient program. By many measures, SNAP successfully satisfies an essential human need and fulfills its mandate to promote the general welfare….
From the abstract:
Many US municipalities confront serious challenges due to aging water and wastewater infrastructure. Many systems require immediate repairs, upgrades, and replacement, but available funding is scarce. Readily available low-interest financing is of great help to such municipalities. The Water Infrastructure Finance and Innovation Act (WIFIA) approved by Congress in 2014 was a step in that direction. WIFIA is a five-year pilot program focused on supporting large-scale projects that may be under-served by existing state revolving funds (SRFs). The authors examine the structure and implementation of WIFIA and its impact on existing financing mechanisms. The cost of debt service in four representative communities in New York was compared under WIFIA, SRFs, and tax-exempt municipal bonds. Although WIFIA financing offered the lowest debt service cost, savings from WIFIA depended on the spread between US Treasury rates and borrowing rates of the SRF-administering agency.
The Children’s Health Insurance Program (CHIP) has been a vital part of America’s health care safety net since its creation in the 1990s. Last year, it provided coverage for almost 9 million children. CHIP is traditionally considered a bipartisan success story and has played a critical role—together with Medicaid and the private market reforms in the Affordable Care Act—in reducing the rate of uninsured children to a historic low of 4.8 percent.
However, CHIP’s funding is not permanent and must be reauthorized this September. Recently, the bipartisan National Governors Association strongly recommended that Congress extend CHIP funding for five years, explaining that “access to health insurance is critical to ensuring a healthy start for our nation’s children.”
Unfortunately, the Trump budget rejects this bipartisan tradition of support by proposing to cut CHIP funding by 20 percent. At first glance, the budget’s proposal to extend CHIP funding for two years may appear to be a positive step. In reality, however, the budget pairs this extension with funding cuts and policy changes that would result in children losing CHIP coverage and potentially becoming uninsured. Even including the cost of the funding extension, the Trump budget would cut CHIP by a net $3.4 billion from fiscal year 2017 to fiscal year 2018—a 20 percent reduction….
Source: Office of Management and Budget, May 2017
Greenstein: Trump Budget Proposes Path to a New Gilded Age
Source: Robert Greenstein, Center on Budget and Policy Priorities, CBPP Statement, May 22, 2017
President Trump’s new budget should lay to rest any belief that he’s looking out for the millions of people the economy has left behind.
President Trump’s Budget Includes a $2 Trillion Math Mistake
Source: Ryan Teague Beckwith, Time, May 23, 2017
President Trump’s budget includes simple accounting error that adds up to a $2 trillion oversight.
Trump releases budget hitting his own voters hardest
Source: Andrew Restuccia , Matthew Nussbaum and Sarah Ferris, Politico, Updated: May 23, 2017
The president’s proposal for next year’s federal spending calls for more than $1 trillion in cuts to social programs, including farm aid.
What Trump’s budget cuts from the social safety net
Source: Denise Lu and Kim Soffen, Washington Post, Updated May 23, 2017
On Tuesday, President Trump released his 2018 budget proposal. It makes deep cuts across many anti-poverty programs, slashing food stamps by more than a quarter and children’s health insurance by 19 percent.
Trump budget slashes money for federal lands, needy and health care
Source: Thomas Burr, The Salt Lake Tribune, May 23 2017
President Donald Trump’s proposed 2018 fiscal budget would hit Utah’s needy and disabled, cut block grants to communities, slash funding for public lands and public transit projects and could hurt rural airport services.
How the Trump Budget Undermines Economic Security for Working Families
Source: Rebecca Vallas, Harry Stein, Eliza Schultz, Neil Campbell, Kate Bahn, Regina Willensky, Kevin DeGood, Antoinette Flores, Ethan Gurwitz, Alexandra Thornton, and Angela Hanks, Center for American Progress, May 23, 2017
With an administration chock full of self-serving millionaires and billionaires, it comes as little surprise that President Donald Trump’s proposed budget would be an enormous windfall for the wealthiest Americans. But the degree to which it privileges the 1 percent at the expense of nearly everyone else—breaking Trump’s campaign promises to restore prosperity to everyday Americans—is staggering. Notably, by calling for cuts to Social Security, the budget violates one of Trump’s most significant promises.
Indeed, his proposed repeal of the estate tax alone—a tax that only affects the wealthiest 0.2 percent of estates—would cost the same as feeding more than 6 million seniors for a year through Meals on Wheels, a program facing deep cuts under the Trump budget.
And that is just one of several massive giveaways to the wealthy that President Trump calls for in this budget proposal while slashing critical investments in education, infrastructure, jobs, and more that make it possible for workers and families to get ahead. Here are seven ways that President Trump’s budget proposal threatens to do them serious damage.
Trump’s Budget Would Hit These States the Hardest
Source: Sam Petulla, NBC News, May 23, 2017
The Trump administration unveiled a budget for 2018 on Tuesday that seeks to overhaul many of the country’s safety-net programs for low-income and struggling Americans. Though these cuts are popular among Republican lawmakers, they affect programs that are actually more commonly used in Republican-leaning states than in Democratic ones, and that in many cases benefit white voters without college degrees — a demographic group that strongly supported President Donald Trump in the 2016 election.
The programs experiencing the deepest cuts provide assistance for health care services to children, the poor and disabled, and that supplement food and housing for those with low incomes. Most of the programs were created decades ago by Democratic presidents.