Center on Budget and Policy Priorities — Full Employment Project (2014)

1.CBPP Full Employment Project Proposal

2.CBPP Full Employment Project Budget

3.CBPP Full Employment Project Staff Time Allocation

4.CBPP Full Employment Project Citations List

5.“The Center on Budget and Policy Priorities is one of the nation’s premier policy organizations working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals.” CBPP – About

6.Notes from a conversation with Robert Greenstein and Jared Bernstein, June 27, 2014. This budget figure excludes some funding for projects like the International Budget Partnership, which is officially part of CBPP but operates relatively independently.

7.

• CBPP quotes journalist Ezra Klein as saying: “Some months ago, faced with my own philanthropic dilemma, I began informally polling friends, sources and readers to get a sense of which organizations carry weight in both foreign- and domestic-policy negotiations. On domestic policy, the name that kept coming up was the Center on Budget and Policy Priorities. It leans left, but people on both sides admire its empirical rigor, focus on policy and fierce advocacy. It is widely acknowledged as having a voice in both the White House and Congress.” CBPP – Support our Work.
• In 2011, Ezra Klein wrote: “Welcome to the first-annual Wonkys, where we recognize outstanding achievements – and disasters – in policy wonkery. Let’s get to them…. Think tank of the year: In a year that was all about budget issues, the Center on Budget and Policy Priorities lived up to its name. Whether you were looking for the latest numbers on state budget cuts, a quick analysis of Rep. Paul Ryan’s proposals, or simply an introduction to where your tax dollars go, CBPP lived up to its reputation as the fastest, fairest, and smartest policy think tank in Washington.” Klein 2011

8.GiveWell’s non-verbatim summary of a conversation with Robert Greenstein on April 3rd, 2014

9.“Following a Congressional hearing (conceived of by the late Peter Goldberg, then with the Prudential Foundation, and engineered by CBPP) where five leading corporate CEOs delivered joint testimony (prepared by CBPP) on the strong evidence supporting the WIC program, a bipartisan Congressional consensus emerged to fully fund WIC — i.e., to provide sufficient funding each year to serve all eligible low-income women, infants, and young children who apply. This consensus has held for nearly two decades (and appears even to include some Tea Party members). WIC continues to serve all eligible women and children who apply.
CBPP produces new budget estimates for the program every 2-3 months on the level of funding needed for the coming year to serve all eligible applicants. These estimates are sometimes higher and sometimes lower than the president’s projected budget, are widely seen as credible, and have been relied upon by both parties.” GiveWell’s non-verbatim summary of a conversation with Robert Greenstein on April 3rd, 2014

10.

• “Special Supplemental Nutrition Program for Women, Infants and Children (WIC) reforms:CBPP helped to develop and promoted a proposal to have infant formula manufacturers bid competitively for a sole-source rebate contract with WIC in each state.
  Formula manufacturing companies initially argued that this model would not save WIC money. Prior to a hearing before the Texas Board of Health, Mr. Greenstein identified three errors in a Texas Department of State Health Services report on the proposal. One
  of these errors inflated expected savings from the competitive bidding proposal, but the other two caused the report to underestimate the savings, with the overall net result that the savings (all of which would be plowed back into the program to serve more low- income mothers and children) had been understated. At the hearing, the formula companies identified only the error that overstated the savings. Mr. Greenstein showed that a full assessment increased the expected savings and supported the recommendation for Texas to adopt competitive bidding. The Board of Health accepted CBPP’s analysis and approved competitive bidding, which then yielded very large savings.
  After successfully advocating for the proposal in several other states as well, CBPP designed a proposal for Congress to require all states to use competitive bidding to award WIC infant formula contracts, and then secured support for the proposal from both the Reagan Administration and key Congressional leaders. The proposal became law, and all states are now mandated to use the competitive bidding model for infant formula for WIC. This is saving $1.8 billion per year and enabling WIC to serve 2.5 million additional low- income women and children each month.
  CBPP subsequently uncovered evidence that infant formula manufacturers were colluding in the bidding process. It documented the abuse and took its evidence to the Federal Trade Commission, which then conducted an investigation that validated the Center’s findings and imposed penalties on the offending manufactures. The collusion promptly ended.” GiveWell’s non-verbatim summary of a conversation with Robert Greenstein on April 3rd, 2014
• “By negotiating rebates with formula manufacturers, States are able to serve more people. For FY 2013, rebate savings were $1.88 billion, supporting an average of 1.97 million participants each month, or about 23 percent of the estimated average monthly caseload.” USDA WIC Fact Sheet

11.

• “CBPP found that in the early 2000s, only 54% of low-income families eligible for SNAP (food stamps) were receiving it. Some requirements, such as the need for many working- poor families to be recertified for benefits every three months, were impractical for many of these families. CBPP designed solutions to these and other participation barriers, which Congress and Administrations of both parties adopted and implemented. In addition, over the past few years, CBPP has provided technical assistance to six states (including three strongly Republican states) participating in a Ford Foundation funded pilot project to better integrate the application and renewal processes of the SNAP and Medicaid programs. The Urban Institute is evaluating the results. The integrated process is enrolling and retaining more low-income applicants and also reducing required staff and administrative costs for the programs.
  When the Affordable Care Act was passed, CBPP approached the Department of Health and Human Services and the Department of Agriculture with a proposal to integrate the application processes of SNAP and Medicaid. Initially, CBPP was told that the eligibility rules for SNAP and Medicaid were too different to integrate. However, by thorough comparison of the eligibility requirements for SNAP and Medicaid, CBPP created a screen of questions that states could apply electronically to their SNAP case files, which — for SNAP recipients who pass the screen — also ensures Medicaid eligibility. The files of 80% of non-elderly SNAP recipients in the typical state pass the screen. (The remaining applicants are still potentially eligible for Medicaid but need to go through the normal application process.)
  The federal government adopted the Center’s screen as a new state option, and the first five states to implement this integrated sign-up method have enrolled over 500,000 SNAP recipients for Medicaid virtually automatically in the first months of health reform implementation.” GiveWell’s non-verbatim summary of a conversation with Robert Greenstein on April 3rd, 2014
• “In response to CMS guidance provided on May 17, 2013, a number of states are employing a new tool for facilitating Medicaid enrollment to conduct an “administrative transfer” to Medicaid while they complete implementation of their eligibility and enrollment systems. This method uses Supplemental Nutritional Assistance Program (SNAP) income information that states already have to identify individuals who are likely eligible for Medicaid and CHIP. New Jersey, the most recent state to implement this strategy, began conducting administrative transfers at the end of May 2014. As of the end of June, 613,554 individuals have been determined eligible for Medicaid or CHIP as a result of this new authority in the six states that have implemented the strategy (including more than 3,000 in New Jersey).” Medicaid & CHIP: June 2014 Monthly Applications, Eligibility Determinations and Enrollment Report

12. Rockefeller Foundation Grant – CBPP

13.CBPP Full Employment Project – Events

14.

The policy proposals, in alphabetical order, are:

• Baker 2014
• Ball, DeLong, and Summers 2014
• Eisenbrey 2014
• Hassett and Strain 2014
• Holzer and Lerman 2014
• Houseman 2014
• Pavetti 2014

15.CBPP Full Employment Project Citations List

16. CBPP Full Employment Project Budget

17.CBPP Full Employment Project Proposal

18.

“We are commissioning a new paper by Ball and Summers that will explore whether well-designed fiscal and economic policies can produce “reverse hysteresis” — that is, can reverse the current “hysteresis” and bring the economy closer to its pre-recession levels of potential GDP and GDP growth.

Economists are beginning to build evidence that policies that produce much tighter labor markets would pull many of those who have left the labor market back into it. In an important new paper, economists David Blanchflower and Adam Posen have developed compelling statistical evidence suggesting that “… many individuals who are not actively searching for work under current labor stack conditions remain attached to the labor market —- a substantial portion of those American workers who because inactive should not be treated as gone forever, but should be expected to spring back into the labor market if demand rises to create jobs.” Federal Reserve Chair Janet Yellen also voiced support for this concept recently, noting that “some retirements are not voluntary, and some of these workers may rejoin the labor force in a stronger economy … a significant amount of the decline in [labor force] participation in the recovery is due to slack …”

The new paper from Ball and Summers that the Project has commissioned will build on this work, advance it, and explore how appropriate policies could help reverse the hysteresis, create more jobs, and grow the economy at a stronger rate. This paper may serve as something of a foundational piece for the Project’s work, and we intend to promote it to a broad audience.” CBPP Full Employment Project Proposal

19. CBPP Full Employment Project Proposal:

• “The role of key Recovery Act measures is not well understood— in particular, the positive efforts of the enhanced low-income assistance and state fiscal relief. Absent such understanding, policymakers will be less likely to take similar steps when the next recession hits. Yet evidence suggests that ARRA’s low-income assistance and state fiscal relief components (as well as the UI components) were particularly effective in boosting the economy and saving jobs. Accordingly:
  The Project proposes to produce one or more papers on the role of the enhanced low-income and state fiscal relief measures, emphasizing their importance as high “bang-for-the-buck” counter-cyclical tools in recessions. (The Center has particular expertise in these areas. It played the lead role in designing these components of the Recovery Act in the fall of 2008, at the request of the incoming Obama Administration, and in making the case for emergency federal UI.)”
• “We also want to flesh out the ideas outlined in the paper by Donna Pavetti that the Project released in April. This paper explained the benefits of a subsidized employment program for low-income people who have difficulty finding jobs. The Project proposes to explore the idea of a subsidized job program that operates on a modest scale in good economic times (in part to keep its infrastructure in place) and ramps up automatically when recession threatens or sets in.”

20.“The Project also proposes to explore and develop options for strengthening the “automatic stabilizers” in the federal budget, so that more counter-cyclical measures kick in automatically when the economy weakens (and perhaps stay in effect until particular economic benchmarks are met). The Project will, for example, explore mechanisms for an automatic increase in the federal share of state Medicaid costs, and possibly other automatic mechanisms for federal fiscal relief or revenue-sharing with state and local governments, when the economy dips into recession. Such mechanisms would ease the severity of recessions, reducing job losses. They also would lessen or avert sharp state and local cuts in health care, education, and other important services during recessions.” CBPP Full Employment Project Proposal

21.“In related work, the Project would examine the potential effects that various fiscal and programmatic proposals likely to be considered in the next few years would have on the effectiveness of the “automatic stabilizers” now in place. For example, proposals to convert SNAP and Medicaid to block grants would largely remove their automatic stabilizer functions — a consideration that’s not well understood. Similarly, proposals to cap federal spending at a share of GDP at or below its historical average would largely eviscerate the automatic stabilizers because in recessions, spending for things like UI, Medicaid, and SNAP automatically increases while GDP falls. Many policymakers do not sufficiently appreciate these dynamics.” CBPP Full Employment Project Proposal

22.“The papers issued in April surfaced a number of promising ideas. A next step is to flesh out some of these ideas and convert them into specific, actionable policy proposals. This entails work to more fully flesh out proposals in such areas as:

• Work sharing: The paper from April by the American Enterprise Institute’s Kevin Hassett and Michael Strain called for increased use of work-sharing, especially during economic downturns. Work-sharing can play an important role in keeping large numbers of people from joblessness for long periods, during which their skills can erode. Today, work-sharing is an allowable practice under the Unemployment Insurance program, but fewer than half the states use it at all. In most states that do allow it, its use is sparse. Research suggests the presence of a number of inhibiting factors. Many states view the federal rules as too difficult to comply with, and many state officials and employers are unfamiliar with this option. In short, there are both administrative barriers (some related to federal or state rules) and informational barriers. The Project could dig deeper in identifying the barriers and proposing remedies to overcome them.
• Job training and apprenticeships: By working with the Urban Institute’s Harry Holzer and American University’s Robert Lerman, the Project could seek to advance the ball in this area as well. We could commission the development of more concrete policy proposals and then work to elevate them.
• Infrastructure: Larry Summers has written about the multiple benefits of more investment in infrastructure: substantial job creation, which could help in reversing the economy’s apparent hysteresis; improved roads, bridges, and mass transit that make the economy more efficient and productive; and lower costs in future decades for deferred maintenance. The Project could explore with Summers and/or others what next steps could advance sound policies in this area.” CBPP Full Employment Project Proposal

23.“Many people across the political spectrum give at least lip service to their desire for full employment. But there often is confusion, misunderstanding, or disagreement about what full employment means, how far we are from it, what are the best policies to achieve it, and how to effectively stabilize the economy and grow potential GDP.

Many policymakers and journalists often assume, for example, that outside of recessionary periods, the job market is at full employment. Yet that has been more the exception than the norm over the past three decades.

In addition, good job training programs are important, but if we fail to boost employment — and we fund programs to train workers on the assumption that jobs are waiting for them when that’s not so — even well-designed training programs will produce disappointing results.

Another set of issues centers on fears of inflation. Some policymakers and commentators are so worried about inflation that they argue against measures to raise aggregate demand and create jobs even when unemployment remains high and inflation remains below target levels, as is the case today.

Furthermore, some argue that only tax cuts (or only tax cuts and deregulation measures) can promote employment and all other fiscal policy measures are bound to fail or cause harm, despite ample evidence to the contrary. Even when there is agreement that some forms of direct job creation (such as the subsidized jobs programs that Pavetti’s paper calls for) could create jobs, there often is still disagreement about whether such policies are desirable because they entail new federal spending.

Accordingly, the Project will seek to engage in debates on these matters and persuasively advance the policy ideas and proposals — and the analysis underlying them — that emerge from the Project’s work. Thus, the Project will include substantial communications and public education work across various types of media, including social media. This work also may include forums or briefings akin to the Project’s event in April.

To advance its communications and public education efforts, the Project will capitalize on Jared Bernstein’s popular blog (“On the Economy”), his column in the New York Times’ “The Upshot” section, and his extensive work on cable news stations MSNBC and CNBC. It will also capitalize on Chad Stone’s weekly column in U.S. News and World Report, the Center’s own widely read blog (“Off the Charts”), both the Full Employment Project and the Center websites, the twitter feeds of various Center staff (including CBPP President Bob Greenstein as well as Bernstein and Stone), and various other means of disseminating Project findings, ideas, and messages and engaging in debates on the issues noted above.

For example, an important near-term debate centers on how quickly the economy is approaching full employment — an issue that’s especially portentous for the Federal Reserve as it conducts monetary policy. Short, accessible analytic pieces of the type that Bernstein features on his blog can be useful in this regard, especially when they enable us to hook our messages to short-term news developments, such as government data releases on jobs, inflation, and wages.

These issues have received more attention of late because the unemployment rate has fallen in recent months, leading some to urge the Federal Reserve to tighten monetary policy (as a means of preventing further inflation). The modest downward trend in the jobless rate is due in substantial part, however, to people dropping out of the labor force. Both Bernstein and Stone have expounded on this issue and will continue to do so.

Issues like these will continue to surface, in some cases on almost a daily basis. The Project will pursue them, with the goal of keeping full employment in the echo chamber of the policy debate.

In essence, “winning the argument” entails ongoing analysis of, and a communications and media presence on, these issues. It requires a steady stream of analyses, blogposts, and commentaries on the dynamics of unemployment and inflation so policymakers do not over-emphasize inflationary concerns at the expense of lower unemployment.

Similarly, the Project proposes to do more media and public education work on “hysteresis,” the concept discussed above that problems emanating from the Great Recession (e.g., the decline in labor-force participation) are persisting and threaten to permanently reduce the economy’s underlying growth rate. (To the extent that people who could work stay out of the labor force, the economy’s potential growth rate will be lowered.)

On the Full Employment Project website, we recently posted an important piece of new work (since our April conference) by Lawrence Ball, which documents the extent of hysteresis across a number of advanced economies and suggests that, rather than being an anomaly, hysteresis is a serious and costly economic problem in many advanced economies today. In addition, as noted earlier, the Project has commissioned important new work by Summers and Ball on “reverse hysteresis” — the concept that hysteresis can be reversed. Fostering greater understanding by policymakers, journalists and other opinion-leaders that hysteresis poses a serious problem but could potentially be reversed through well-crafted full employment and related economic policies will be an important part of the Project’s work.

In short, what’s lacking in the public policy debate, and what this part of the Project seeks to undertake, is a continuous effort to collect and promote to wider audiences key findings and messages on these important employment and employment-related economic issues — in particular, why it’s so important to return to full employment and what are some of the promising ways to get there.”
CBPP Full Employment Project Proposal

24.

• CBPP Full Employment Project Budget
• CBPP Full Employment Project Staff Time Allocation

25.Notes from a conversation with Robert Greenstein and Jared Bernstein, June 27, 2014

26.Notes from a conversation with Robert Greenstein and Jared Bernstein, June 27, 2014

27.Notes from a conversation with Robert Greenstein and Jared Bernstein, June 27, 2014