June 5 Federal Update: Catastrophic Default Averted
Last weekend, after weeks of negotiation, Speaker of the House Kevin McCarthy (R-Calif.) and President Joe Biden agreed to a deal, in principle, regarding the debt ceiling and the federal budget. Bipartisan majorities in the House of Representatives and the Senate voted in favor of the bill, which was then signed into law by President Biden on Saturday. The bill suspends the debt ceiling until 2025, after the next presidential election, in addition to freezing nonmilitary discretionary spending for fiscal year 2024 and granting a one percent increase in 2025. Both sides conceded they did not get everything they wanted, but, given the makeup of Congress and the occupant in the White House, a compromise was necessary to avert default and economic catastrophe.
Here are some of the bill’s major takeaways of interest to the social sector community:
The legislation introduces new work requirements on older recipients of the Supplemental Nutrition Assistance program (SNAP), or food stamps. Adults ages 50-54 without dependents will now be required to work or volunteer 80 hours per month. Previously, the work requirement was capped at age 49. The bill, however, exempts veterans, homeless people, and young adults aging out of foster care from work requirements. Though the White House claims these exemptions will result in the same amount of people being eligible for food stamps, poverty advocates say the new requirements will leave many adults worse off. The bill also incorporates stricter work participation requirements in the Temporary Assistance for Needy Families (TANF) program.
The compromise also terminates the pandemic-induced pause on student loan repayments and interest at the end of Aug., though it does not touch President Biden’s student loan forgiveness program, which is currently under consideration by the Supreme Court. Additionally, it rescinds $10 of $80 billion the Internal Revenue Service (IRS) received through the Inflation Reduction Act last year, though much of that money will be repurposed to offset the cuts to nondiscretionary spending. Furthermore, the bill claws back $30 billion of unspent COVID-19 relief funds, but it does not impact the State and Local Fiscal Recovery Funds which many nonprofits have relied upon.
Key Hearing Takeaways: Solving the Child Care Crisis: Meeting the Needs of Working Families and Child Care Workers
On Wed., May 30, the Senate Committee on Health, Education, Labor, and Pensions held a hearing entitled “Solving the Child Care Crisis: Meeting the Needs of Working Families and Child Care Workers.” Although the data is incomplete, evidence suggests pandemic relief funds allowed states to stabilize child care industries and improve accessibility for families; however, discussion of extending or expanding these programs amid the federal debt negotiation was contentious.
Key Hearing Takeways
- The Senate Committee on Health, Education, Labor, and Pensions held a hearing on improving access to child care and improving the child care industry.
- Many parents struggle to pay for child care while child care employees are often paid little more than minimum wage.
- Of the $52.5 billion granted to states for pandemic child care relief, $18 billion has not yet been spent.
- Several witnesses argued pandemic child care relief must be extended and expanded in order to support families and the child care industry.
- Multiple Republican Senators raised concerns federal funding would lead to teaching about race and transgender rights in schools, while others were concerned about the cost of relief.
Committee Chairman Bernie Sanders (D- VT) opened the hearing by calling out the nation’s “broken and dysfunctional childhood system.” He emphasized the high cost of child care, citing a survey showing 40 percent of parents in America have gone into debt to pay for it. Additionally, he highlighted the difficulty American parents face even in finding an available slot for daycare services as well as the low wages, or “starvation wages,” child care providers earn. Sanders also addressed the negative economic result of this crisis, stating there are hundreds of thousands of people, primarily women, who would like to join the workforce but cannot do so without accessible and affordable childcare. He concluded that while the American Rescue Plan was important progress, Congress needs to do more than just renew this funding; it needs a vision for the future in which every American family has access to high-quality, affordable health care and child care workers are given the wages they deserve.
Ranking Member Bill Cassidy (R- LA) began by acknowledging child care in America is far too expensive for many families while disagreeing that an increase in federal funding is the appropriate solution. Cassidy centered his argument around the theme: “Don’t just do something, think,” pointing out the Government Accountability Office will not be able to report on how federal child care funding has been spent for several years, and there is still $18 billion in COVID-19 relief funds that has not yet been spent. Additionally, Cassidy reminded the committee that American parents do not want a one-size-fits-all approach to child care, as 51 percent prefer informal child care over formal. He also contends it is ironic to discuss a $600 billion “government-run institutionalized child care system” while the federal government is potentially days away from defaulting on its debt.
The first witness, Elizabeth Groginsky, New Mexico’s first Early Childhood Education and Care Department Cabinet Secretary, attested to the success of New Mexico’s use of federal funding to save the child care industry from collapse during the pandemic and create a high-quality, equitable, and affordable child care system. As one of only several states to create a cabinet secretary position and state agency for early childhood programs, New Mexico was able to stabilize the child care industry, increase employee compensation, reduce cost, and expand access. The popular program was implemented using federal pandemic relief funds, and Groginsky warned that continued federal investment is necessary to maintain the transformational gains her state achieved.
Lauren Hogan, Managing Director of Policy and Professional Advancement for the National Association for the Education of Young Children, explained the child care crisis by relating it to a deep hole in the ground surrounded by quicksand, in which parents and educators are standing on the edge, struggling to build a bridge across the chasm where public funding should be. Hogan explained child care is an example of market failure; neither families nor educators can absorb the true cost, leaving parents paying more for child care than college tuition and educators making poverty-level wages. She suggested relief funds stabilized the sand around this hole, but as these grants end, the cost will be passed to families and providers, who will be forced to increase costs, cut wages, and serve fewer children. She ended her statement by stating “The hole is deep, the quicksand is strong, and parents and educators can’t build the bridge alone. Thankfully, we know federal investments in child care work, and Congress must make them before it’s too late”.
Cheryl Morman, Family Care Provider and President of the Virginia Alliance for Family Child Care Associations, detailed the challenges of owning a family child care business and the relief provided by federal funding during the pandemic. Mormon was able to continue to provide care throughout the pandemic due to stabilization funds, with six of the eleven families in her care receiving financial assistance to subsidize care. She attested relief funding was critical to saving the child care industry, her own business included, but more is needed. For instance, she has vacant spots she could fill if she were to hire another employee, but she is not able to offer a wage that qualified employees will accept.
Carrie Lukas, President of the Independent Women’s Forum, argued American parents want choices when it comes to child care, not a “one size fits all government daycare regime,” and many Americans are satisfied with the child care arrangements they currently have. Lukas warned against day care centers operating like the K-12 system, contending that debates over curriculums, pronouns, sex-ed, and masking policies will soon be a part of American preschools if the government becomes the primary funder. Instead, Lukas believes the government should make child care more affordable by eliminating regulations not directly related to safety and quality of care and financially support families through tax relief or direct support to parents that is not conditional on whether the family pays for child care.
Kathryn Larin, Director in Education, Workforce, and Income Security in the Government Accountability Office explained what is currently known about how federal relief funds have been used by states and when more data will be available. Of the $52.5 billion allotted for pandemic relief child care funds and flexibilities, about $34.5 billion has been spent by states. Most of the funds, about $11.7 billion, were allocated through the American Rescue Plan, meaning states have until Sept. of 2024 to spend it. The rest must be spent by Sept. of 2023. There is some evidence these funds were successful at stabilizing child care industries, although state officials did face challenges in adapting their subsidy programs quickly after such a large increase in funding. Because not all the funding has been spent and because of significant lags in reporting of data, a full account of how funding was used will not be available until 2025 or 2026.
Following the witness statements, many Democrats called on Secretary Groginsky, Ms. Hogan, and Ms. Morman to affirm the need for increased federal funding for child care. Secretary Groginsky reemphasized the popularity and success of New Mexico’s program. She also expanded on details of the program and clarified families now have more choices than ever, and there is not a “one size fits all” approach as was suggested by Ms. Lukas and several Republican Senators. Ms. Hogan emphasized the need for federal funding to assist parents and educators and explained the failure of the market that necessitates such intervention. Ms. Morman expressed the importance of access to home-based care for all Americans, particularly families in rural areas, low-income families, and families of color.
Several Republican Senators called on Ms. Lukas, who expressed concern about federal funding, pointing to the cost of government programs and threats to religious education, as well as worries that preschools will function similarly to the K-12 system and that parents will be disincentivized from staying at home with their children. The discussion of curriculum was raised by Republican Senator Mullin, who read passages from a book entitled Our Skin: A First Conversation on Race and a lyric from the song “Jesus loves the Little Children,” and asked several of the witnesses which was better to teach. Senator Cassidy also raised concerns about curriculum, asking Ms. Hogan if she formally recommends educators tell parents about the content of material introducing children to the concept of “transgenderism.”
Amidst contentious partisan debate, including several interruptions of Senators and witnesses as well as Senator Mullin stating he is baffled Senator Sanders was chosen as the Committee Chair as a “self-proclaimed socialist,” Alaskan Republican Senator Murkowski seemed to agree federal funding was necessary to increase access to child care. Murkowski pointed out the lack of access to child care was not simply a workforce issue, but a military readiness issue as well, explaining the Coast Guard informed her they are struggling to remain in Alaskan communities without child care.
Senator Sanders concluded the hearing by reiterating the points from his opening statement, saying “I don’t think it’s too much to ask that in the richest country in the history of the world, all of our children, no matter where they live, no matter what their background is, get the quality child care and early childhood education they need in order to flourish later in life. I don’t think that’s a radical, socialistic, if you like, statement. I think that’s something that the vast majority of the American people believe in.”
Momnibus Bill Introduced
On Mother’s Day, May 15, Reps. Lauren Underwood (D-IL), Alma Adams (D-NC), and Sen.Cory Booker (D-NJ) introduced the Black Maternal Health Momnibus Act of 2023, the most comprehensive legislation to tackle the appallingly high rate of maternal mortality in the United States. The United States has the highest rate of maternal mortality in the developed world, and the rate has increased by 89% in recent years, according to the Centers for Disease Control and Prevention. The Momnibus Act would commit over one billion dollars to ensure all mothers have the support and resources they need to be safe and healthy. Among other things, the legislation would address the social determinants of health that affect maternal health outcomes, including housing and transportation. It would also make the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) accessible during the postpartum and breastfeeding periods. Community based organizations that work with mothers would obtain new funding, and the perinatal workforce would receive funds to grow and diversify. Finally, the bill would put more emphasis on data collection and quality to ensure informed decision making and policy in the future. 181 members of the House of Representatives have endorsed the bill, as well as 200 organizations.
New Federal Housing Initiative Announced
On May 18, the Biden-Harris administration announced the launch of ALL INside, an initiative of All In: The Federal Strategic Plan to Prevent and End Homelessness, with the goal to decrease homelessness by 25 percent by 2025. The ALL INside initiative will coordinate efforts between the U.S. Interagency Council on Homelessness, its 19 federal member agencies as well as state and local governments, including Chicago, Dallas, Los Angeles, Phoenix Metro, Seattle, and the state of California. The initiative will send one federal official to each community to ensure coordination with local officials on federal programs as well as to identify regulatory flexibilities and advance best practices. ALL INside will leverage Medicaid housing support and behavioral health care, as well as rental assistance and housing programs in the Department of Housing and Urban Development. It will also engage other agencies, including the Social Security Administration, the Department of Veterans Affairs, and the Department of Labor to speed the transition to permanent housing and provide wrap-around services. ALL INside builds upon the administration’s past efforts to tackle homelessness, including the historic investments made in the American Rescue Plan.
New Study Shows the Futility of TANF Work Requirements
A new study from the Center on Poverty and Social Policy at Columbia University shows that strengthening work requirements in the Temporary Assistance for Needy Families (TANF) program – one of the key pillars of the budget deal reached this week – could cost society up to $30 billion per year, rather than reduce the budget. In the negotiations, the House GOP caucus, led by Speaker of the House Kevin McCarthy (R-Calif.), pushed to decrease the debt by enforcing stricter work requirements in numerous federal benefits programs, including TANF, Medicaid, and food stamps. The study illustrates, however, that the TANF work requirements could lead to loss of benefits, which in the short and long-term carry immense social costs. Specifically, each dollar lost in TANF benefits translates into eight dollars in societal costs per year, in the form of increased spending on children’s health and child protective services, as well as decreased tax receipts from children’s future earnings. The exact number of families that will lose access to TANF is unclear at this point; however, the study offers numerous estimates. If 25 percent of families lose monthly TANF cash benefits, the economic and social costs could amount to $7.4 billion per year; if 50 percent lose benefits, the cost could equal $15 billion per year. At worst, the cost could rise to $29.6 billion per year if states cut TANF benefits to all families over strict work requirements.
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