Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
118570002
label
Fairness II - An Executive Briefing Book [White House Office of Policy Information 05/01/1983] (4)
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
118570002
contentType
document
title
Fairness II - An Executive Briefing Book [White House Office of Policy Information 05/01/1983] (4)
citationUrl
identifierLocal
137
collections
Records of the White House Office of the Deputy Chief of Staff (Reagan Administration)
Michael Deaver's Subject Files
thumbnailUrl
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
118570002
coverageEndDate
logicalDate
1985-12-31
year
1985
coverageStartDate
logicalDate
1981-01-01
year
1981
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
b47b490d90dde212
ocrText
Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual
collections.
Collection: Deaver, Michael
Folder Title: Fairness II-An Executive
Briefing Book [WG Office of Policy
Information 05/01/1983] (4)
To see more digitized collections
visit: https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories
visit: https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives
Catalogue: https://catalog.archives.gov/
JOB TRAINING AND EMPLOYMENT
History.
The federal government initiated job training and
employment programs in the 1930s. The public jobs of that
era were widely criticized as "make-work," and were
generally ineffective in treating the root causes of the
unemployment problem.
With the return of prosperity after World War II, the
federal government largely withdrew from jobs creation,
although not from job training. Yet the government spent
only $209 million for all employment and training programs
in 1963.
Job training programs were greatly expanded during the
"Great Society" era of the mid-1960s. With the passage of
the Emergency Employment Act of 1971 and the Emergency Jobs
and Unemployment Assistance Act of 1974, there was a
reversion of policy from job training back to direct
provision of jobs. In 1964, public jobs accounted for none
of the employment and training dollars spent. By 1980,
public jobs accounted for more than half.
The Program.
The federal government's principal employment and
training programs were brought together under the
Comprehensive Employment and Training Act of 1973.
(CETA).
* These included the Job Corps training program
(established in 1964) and the public jobs program
established by the Emergency Employment Act of 1971.
* Subsequent legislation, in 1974 and 1978, expanded
the jobs creation role of CETA, and put the Young
Adult Conservation Corps (established 1977) and the
Summer Youth Employment Program (established 1965)
under CETA auspices.
CETA programs were administered by units called prime
sponsors, which are states, cities, and counties, or
combinations thereof of over 100,000 population.
-- Grants to prime sponsors were used to provide various
kinds of training, counseling, and supportive services
to unemployed and economically disadvantaged
individuals.
-- CETA has also provided subsidized public jobs,
stipends, and other income support to those
individuals who participated in federally-sponsored
job experience or training.
O Coverage.
-- CETA was expanded in 1974 to to allow for the creation
of more public jobs in FY 1975. In that year, 2.8
million people were enrolled in the program.
-- By 1978, there were 4.5 million participants in CETA.
- In 1982, approximately 1.3 million people participated
in CETA.
o Costs.
-- In 1968, at the height of the Great Society, federal
job training and employment programs cost $1.6 billion.
-- By 1974, the amount had nearly doubled to $3.1 billion.
-- This amount more than tripled in the first 1978 Carter
budget, to $10.8 billion; more than half of that amount
was for subsidized jobs.
Administration Action to Date.
-- For FY 1982:
* President Carter had proposed funding CETA programs
at a level of $9.6 billion, including:
- $4 billion to give "economically disadvantaged"
unemployed persons public service jobs. (The
federal government subsidized 313,000 such jobs in
FY 1981; the Carter Administration would have
increased that number to 340,000 in FY 1982.)
- $1.1 billion for a new youth initiative program,
to consolidate and expand efforts to provide
subsidized jobs, education, and training to dis-
advantaged young people.
-- Abolition of the Young Adult Conservation Corps
(YACC).
* President Reagan proposed a major overhaul of the
whole CETA concept.
- The President called for:
a) Eliminating the public service employment
program.
b) Shelving the costly Carter youth initiative.
c) Abolishing YACC.
- The President requested a total budget of $3.9
billion for remaining CETA programs.
* Congress approved:
- Eliminating the public service employment programs
and YACC.
- A total budget of $3.8 billion for the remaining
CETA programs.
-- For FY 1983:
* The statutory authority for appropriations for CETA
expired at the end of FY 1982.
* President Reagan proposed an alternative to CETA,
with total funding of $2.4 billion, that would:
- Replace all the separate grants to states and
localities with a single block grant, totalling
$1.8 billion in FY 1983.
a) Rely primarily on the private sector to develop
and administer programs at the local level.
b) Require that 75% of resources be spent on
training, as opposed to 18% under CETA.
- Continue the Job Corps at a reduced level of $387
million.
- Provide $200 million of assistance to special
groups to replace the other nationally administered
programs.
- Specify that none of the grant or other nationally
administered programs would pay stipends, wages, or
other forms of income support, allowing service to
the same number of people as in the programs that
would be replaced.
* Congress responded by passing the Job Training
Partnership Act of 1982 (JTPA), which incorporated
the principal features of the President's proposal,
including:
- Grants to states.
- A primary role for the private sector.
- The requirement that 70% of program resources be
spent on actual training.
*
JTPA also provided for:
- Continuation of the Job Corps as a separate
program.
- A new grant program to assist displaced workers
in getting training for new occupations.
Congress, however, delayed full implementation of the
President's program until 1984 by providing that FY
1983 would be a transition year, during which the
old CETA programs would continue to be funded at a
total of $4.0 billion.
-- Beginning in FY 1984:
*
Resources for most job training programs will be
available through grants to the states.
- Resources will be allocated to service areas
with populations of 200,000 or more, designated
by state governors.
- Programs will be developed and administered by
local private industry councils (PICs), working
in cooperation with local governments.
* Three grants -- a block grant for training
disadvantaged youth and adults, one for SYEP,
and one for displaced workers -- will be provided
to the states.
- 70% of resources must be spent on training.
- Only 30% may be spent on support services,
administration, and stipends.
*
The Job Corps training program will be continued.
The President's Proposals for FY 1984.
Block grants to the states.
-- Funding of $1.9 billion.
Summer jobs.
-- Funding of $638 million for SYEP.
Assistance to displaced workers.
-- Funding of $ $223 million -- a doubling in funding from
last year.
O Job Corps.
-- Funding of $553 million to train more more than 80,000
severely disadvantaged youths.
-- This is more than were assisted in 1980, and about
the same number as were assisted in 1983.
0
Other training programs.
-- Funding of $230 million for other job-related efforts,
including training programs for veterans, native
Americans, and migrant workers, and labor market
information development.
0 A bipartisan jobs bill recently signed into law with three
major provisions.
-- More than $4.4 billion in accelerated funding of
construction projects already underway.
-- $5.3 billion for unemployment insurance benefits.
-- $216 million for humanitarian assistance for the
unemployed.
Federal-state employment services.
-- Funding of $858 million for employment services.
Proposed legislation to create a "youth employment
opportunity wage" for youth under age 22.
-- This would be in effect a special minimum wage for
youth of $2.50 an hour, 25% below the regular minimum
wage of $3.35.
-- This wage would be effective between May 1 and
September 30.
Legislation by which eligible workers who have exhausted
their unemployment benefits would qualify for vouchers
(good for jobs begun by March 31, 1984) which would
entitle an employer hiring them to a tax credit.
-- Individuals eligible for Federal supplemental
compensation would have the option of converting their
benefits into vouchers.
-- These vouchers would entitle an employer hiring the
individual on a full-time basis to receive a tax credit
equal to the value of the voucher.
O Legislation to permit the states to use 2% of their
unemployment insurance tax receipts for training, job
search, and relocation of unemployed workers.
Justification (General).
The nature of the unemployment problem.
-- During nonrecession times, persons who leave their
jobs, new entrants to the labor force looking for their
first jobs, and reentrants, account for more of the
unemployed than those who lose their jobs.
-- Unemployment for most workers is usually less than ten
weeks.
-- The recent recession resulted in a longer period
ofunemployment for many workers; as many as one-quarter
of the unemployed will have been involuntarily
out of work for longer than six months 1983.
-- This is due in part to the length and depth of the
recession; to what economists call cyclical
unemployment -- unemployment that results from
cyclical downturns in economic activity.
-- It is also due to structural unemployment --
unemployment that remains even after cyclical
recoveries. Among the structural factors that create
such unemployment are:
-- Inability of older industries to compete with foreign
imports.
* A mismatch between the skills of laid-off workers
in declining industries, and the skills needed by
rising new industries.
*
Barriers to labor market entry and mobility -- such
as the minimum wage.
Costly federal makework programs provide no real solutions
to these problems.
-- That approach has been tried many times before and has
consistently failed.
The CETA program, the most recent example, spent
$57 billion over eight years, yet only 30% of
participants were ever placed in jobs, and only
half of these were placed in private sector jobs.
The job training and employment programs proposed by
President Reagan will:
-- To provide help to more than 3 million unemployed in
securing training or finding real jobs in the private
sector.
-- Reduce Administrative overheaed.
-- Reduce administrative overhead.
-- Promote the economic growth that will create more than
5 million new jobs by the end of next year and more
than 15 million by the end of 1988.
Justification (Specific).
0 Block grants to the states.
-- The best way to ensure that training programs will
prepare participants for jobs that actually exist is to
have the business community play a pivotal role in the
development of training programs. The block grant
program provided for by the JTPA is structured toward
that end.
-- Under JTPA, 70% of resources will be spent on actual
training; only 18% of CETA resources were spent on
training.
-- The block grant approach also ensures that programs
will be managed by persons familiar with local needs,
and that administrative costs will be held to a
minimum.
-- The proposed funding level will support 406,000
service/years, a one-third increase over programs in
effect in FY 1983.
Summer jobs.
-- This proposed funding level will provide approximately
718,000 summer jobs for persons between the ages of 14
and 21 -- about the same number as last year.
Assistance to dsplaced workers.
-- The proposed funding level will assist nearly 100,000
displaced workers -- four to five times the number
assisted by earlier programs.
Jobs Corps.
-- The proposed funding level will train more youths than
were helped in 1980, and about the same number as were
assisted in 1983.
Bipartisan jobs bill.
-- The accelerated construction funding will provide jobs
now, when they are needed, without increasing long-term
budget totals.
-- The supplemental unemployment insurance benefits will
assist workers who have exhausted unemployment
payments.
-- Humanitarian aid will assist those unemployed workers
for whom current federal programs cannot provide
adequate assistance.
Federal-state employment services.
-- The proposed funding level will maintain the same level
of employment services as financed in FY 1983 under the
previous system.
Youth employment opportunity wage.
-- Permitting young people to work at the special youth
employment opportunity wage allows them to compensate
for lack of skills and experience when seeking jobs
by offering their services at a lower rate.
*
This proposal allows young people to place their
feet firmly on the first rung of the job ladder.
* Once they have acquired skills and experience, they
can command higher wages.
-- This proposal would open up between 150,000 and 640,00
new jobs for youth.
Employment vouchers.
-- Under current law, no special tax incentives are
provided to employers who hire individuals who
have experienced long-term unemployment.
-- The legislation proposed by President Reagan would
provide employers precisely such an incentive.
-- The vouchers would help more than 700,000 long-term
unemployed workers secure new jobs over the next two
years.
Using unemployment receipts for training, research, and
relocation.
This proposal will provide an added option for states
to assist displaced workers, without requiring
increased state spending.
Questions and Answers.
Persistently high unemployment. Unemployment is projected
to remain at historically high levels in FY 1983 and
1984. Shouldn't the Administration initiate a full-scale
jobs creation program like the WPA in response to this
problem?
-- History proves that the federal government cannot
create jobs.
*
The federal government has no resources of its own;
it must take money from the private sector through
borrowing or taxation.
- Thus the government destroys private jobs in the
process of "creating" public jobs; since federal
jobs are far more costly to create, the number of
private sector jobs lost is greater than the number
of public jobs generated.
- Make-work jobs are especially wasteful, since they
produce little of value to society.
* The Works Progress Administration (WPA), in
particular, did not work.
- WPA employed a total of 8 million people between
1935 and 1943, but put many of them to "work"
putting on plays and painting murals.
* Ultimately, it took World War II to end the high
unemployment levels of the Great Depression.
-- The single most effective long-term cure for the
unemployment problem is to pursue policies that foster
sustained economic growth.
* The economic program the Reagan Administration has
put in place will produce the necessary economic
growth to put millions of Americans back to work
without reigniting inflation during the next two
years.
* Comparison to "jobs" program.
- Growth will create more than 5 million new jobs by
the end of next year.
- In contrast, the "jobs bill" considered by Congress
last December would have "created" a mere 300,000
public jobs, while destroying an even greater
number of private sector jobs.
The right to a job. Doesn't the federal government have a
responsibility to ensure that everyone who wants to work
has a job?
-- The President certainly believes that everyone who
wants to work should be able to do so.
-- However, public jobs are not the answer; the government
simply does not have the resources to "gurantee"
everyone a job -- at least without sending the economy
into hyperinflation or imposing social controls
antithetical to the Amrican priniples of freedom.
-- It is better for the unemployed for the government to
foster conditions for long-term non-inflationary
growth.
The bipartisan bill. How does the accelerated
construction measure, which the President has signed,
differ from "jobs creation" legislation of which he
disapproves?
-- These will not be make-work jobs, but jobs in projects
previously determinied to be necessary.
-- Because the expenditures are already planned, total
federal spending over the next few years will not be
increased -- but the jobs will be provided now, when
they are needed.
Objections to the youth employment opportunity wage. Will
a lower minimum wage for youth reduce unemployment, or
just throw a different group of people out of work?
Won't employers fire adult workers in order to hire
young people at the lower rate?
-- The President's proposal includes specific protections
for current workers.
* Employers could not lay off an adult worker and
replace him with a youth at $2.50 an hour.
* Employers could not reduce the wage rate of a youth
employed before May 1.
*
Violations of either protection would be subject to
criminal and civil penalties contained in the Fair
Labor Standards Act.
Net effect. Then what good is the special wage? How
will young people be helped?
-- The youth employment wage will create more jobs
for young people.
-- The number of jobs in our economy is not permanently
fixed. There are many employers, particularly in the
service sector of our economy, who would hire more
unskilled workers if they did not have to pay the
the minimum wage.
-- The youth employment opportunity wage would create
between 150,000 and 640,000 jobs for youth.
0 Unfair to youth. Why should young people be forced to
work for less than the minimum wage? Isn't that unfair?
-- No one will be "forced" to work for less than the
minimum wage.
-- Instead, young people would have the opportunity to get
training and work experience at jobs that would not
exist if the full minimum wage were in effect.
-- To put it another way: Instead of being forced to be
unemployed at $3.35 an hour, young people would have
the opportunity to work at $2.50 an hour if they wanted
to.
Other help for the unemployed. What else has the
Administration done to help the unemployed?
-- The Administration has already extended unemployment
benefits three times.
-- The President supported the Export Trading Company Act,
enacted into law last year, which is expected to help
create up to 300,000 new jobs.
-- The Administration has proposed the creation of
enterprise zones to create jobs -- particularly jobs
for disadvantaged workers -- in the nation's depressed
urban areas and rural towns and to rebuild and
revitalize these areas.
* The legislation would create a series of federal
tax incentives and provide federal regulatory
relief.
* State and local governments would be encouraged
to offer additional tax and regulatory initiiatives.
SOCIAL SECURITY
History.
In a June 8, 1934, message to Congress, President
Roosevelt indicated that he was planning a national social
insurance system to provide against "misfortunes which
cannot be wholly eliminated in this man-made world of ours."
The following year, Congress enacted the Social
Security Act of 1935.
o The Program.
-- Old Age, Survivors, Disability, and Health Insurance
(OASDHI), which provides benefits through three major
trust funds:
* Old Age and Survivors Insurance (OASI), a system
under which people contribute payroll taxes while
working in order to collect benefits when they
retire, or to enable their survivors to receive
benefits in the event of the worker's death.
*
Disability Insurance (DI), established in 1956, which
provides benefits in the event the covered worker is
totally disabled and unable to do any work for a year
or more.
*
Hospital Insurance (HI), established in 1965, which
covers hospital insurance costs for individuals who
are either disabled for a period of 48 months or more
or over 65 years old.
Program Changes.
-- In 1939, even before the first benefits were paid out,
Congress made survivors and dependents of insured
workers, not just the workers themselves, eligible for
future monthly retirement benefits.
-- Amendments in 1950 and 1954 expanded the system from
one largely for urban workers to one that included
virtually all of the labor force, including
self-employed, farm, and domestic service workers as
well as many employees of state and local governments
and non-profit organizations.
-- In 1956, disasbility insurance was added for the
long-term and permanently disabled. This placed the
"D" in OASDHI.
-- Beginning in 1956, women were allowed to retire as
early as age 62 -- rather than 65 -- and receive
reduced benefits. In 1961, men were included in this
provision.
-- Later amendments allowed disabled widows and widowers
to received reduced payments as early as age 50, and
non-disabled widows and widowers at age 60.
-- In 1972, automatic COLAS were enacted, taking effect in
1975.
-- In 1977, the previous Administration proposed, and
Congress enacted, a change in the method of indexing
benefits in order to eliminate overcompensation for
inflation.
--- During that year, the previous Administration also
proposed, and Congress enacted, major increases in tax
rates. The tax increase was spread out through 1990.
o Costs.
-- Total costs.
*
In 1962, Social Security OASDI outlays totaled $14
billion.
*
In 1970, the level was $29.8 billion.
*
And in FY 1983, $168.0 billion.
-- Share of budget and GNP. -
*
In 1962, Social Security accounted for 13.1% of the
federal budget and 2.6% of GNP.
* In 1970, it accounted for 15.2% of the budget and
3.1% of GNP.
* In FY 1983, the level is 20.9% of the budget and 5.3%
of GNP.
-- Tax rates.
* In 1962, the maximum Social Security tax rate for
each of employers and employees was 3.125% on an
earnings base of $4,800.
* In 1970, the maximum was 4.8% on $7,800.
* And in 1983, it is 6.7% on a $35,700 earnings base.
O Coverage.
-- The number of beneficiaries increased from 3.5 million
in 1950 to 14.8 million in 1960. In 1983, approximately
36 million Americans will receive Social Security
benefits.
-- The covered worker-beneficiary ratio was 36-to-1 in
1945. It was 13.9-to-1 in 1950. It was 4.9-to-l in
1960. And in 1983, there are slightly more than 3
workers paying into the system for each person
receiving benefits.
--- For all retired workers, monthly benefit levels
averaged $76.19 in 1962. They averaged $118.10 in
1970. And the average benefit level for a retired
worker alone is $408 in FY 1983.
o Administration Action to Date.
-- For FY 1982:
* This Administration proposed, and Congress enacted,
significant reforms through the Omnibus Budget
Reconciliation Act of 1981, including:
- Elimination of benefits for new adult students and
phase-out of benefits to current adult students
over four years.
- Payment of lump-sum death benefits only to
survivors and not directly to estates or funeral
homes.
- Integration of disability insurance benefits with
other public disability payments, and elimination
of public disability benefits which exceed a
worker's pre-disability take-home pay, adjusted for
inflation.
* Later in 1981, the Administration proposed, and
Congress enacted, more reforms, including:
- Provision for inter-fund borrowing, allowing the
greatly depleted OASI trust fund to borrow from the
DI and HI trust funds through December 31, 1982,
with provision for repayment with interest. This
borrowing was allowed to facilitate benefit
payments through June 1983.
- Extension of Social Security payroll taxation to
the first six months of sick pay.
-- For FY 1983, the Administration proposed, and Congress
enacted, Social Security reforms in the Tax Equity and
Fiscal Responsibility Act of 1982 (TEFRA), including:
* Inclusion of Federal employees for HI portion of
Social Security (Medicare), effective January 1,
1983.
* Allowances for reporting tip income for employers
with ten or more employees for Social Security
purposes.
* Indefinite extension of interim provisions first
enacted in the Revenue Act of 1978 under which
taxpayers who had a reasonable basis for not treating
workers as employees in the past could continue to do
so without incurring federal Social Security or
unemployment compensation tax liabilities.
The President's Proposals for FY 1984.
O The President endorsed a bipartisan recommendation by the
National Commission on Social Security Reform to address
the solvency of the Social Security system. The Congress
passed this package substantially as proposed, and the
President signed the Social Security Amendments of 1983
into law on April 20, 1983.
o The main elements of the package are:
-- Raise $25 billion by covering all non-profit and new
federal employees under Social Security, and ban
withdrawal from coverage by State and local employers.
-- Raise $27 billion by counting half of Social Security
benefits as taxable income for taxpayers with adjusted
gross incomes in excess of $25,000 for an individual
and $32,000 for a couple, and credit the revenues
raised to the OASDI trust funds.
-- Raise $39 billion by advancing the OASDI tax rate
increase scheduled for 1985 to 1984, and provide a
refundable tax credit for the year 1984 for the part of
the employee rate that is rescheduled, and advancing
72% of the 1990 rte increase to 1988.
-- Save $39 billion by delaying the Social Security COLA
for six months, making the increase payable in January
instead of July.
-- Raise the self-employment OASDI tax rate by one-third,
making it comparable to the combined employer-employee
rate, and permit a credit initially and later a
deduction for part of the tax.
-- Raise $18 billion through a "catch-up" federal general
revenues payment to the Social Security trust funds for
past military service and making future payments on a
timely basis.
-- Improve equity by removing certain gender-based
distinctions affecting widows, widowers, divorced
spouses and survivors, and eliminating "windfall"
benefits for future retirees with pensions from
non-covered employment.
-- Provide incentives for later retirement for those
between ages 65 and 70 by gradually increasing from 3%
to 8% the delayed retirement credit phased in over the
years 1990-2010.
Justification (General).
0 To make the system solvent.
-- The OASI trust fund was no longer operating on a sound
financial basis.
-- Without corrective legislation in the very near future,
the fund would have been unable to make benefit
payments on time beginning no later than mid-1983.
-- Under previous law, and on the basis of any reasonable
set of economic assumptions, the expenditures of the
OASI program would have continued to exceed income from
payroll taxes and other sources through at least 1986.
-- The enacted legislation will correct these critical
problems.
O To correct the trust fund's shortfalls.
-- For the short-term, the enacted legislation will reduce
the shortfall by an estimated $166 billion through 1989
-- enough to make up the funding gap the Social
Security Commission had foreseen through 1990 --- and it
is projected to restore trust fund balances to a safer
reserve level.
---- For the long-term, the legislation eliminates the 75-
year shortfall identified by both the Commission and
the 1982 Trustees Report.
0 The legislation contains some elements which in isolation
would not have been totally acceptable to the President,
but were included in a package which was the best proposal
which could have been agreed upon and enacted for the
benefit of the Nation's workers and Social Security
recipients.
Justification (Specific).
O The inclusion of all non-profit and new federal civilian
workers in the Social Security system.
-- The additional OASDI taxes paid on behalf of the
newly-covered workers over the long run will exceed, on
the average, the additional benefits that result from
such employment, thereby improving the Social Security
system's cash-flow position.
-- This occurs because many federal workers receive Social
Security benefits upon their retirement by having
worked a short time in the private sector; they should
be required to contribute to the system as well, and
their windfalls should be eliminated.
-- Present federal workers will not be affected by this
recommendation, and the financing of their benefits
over the long run will not be adversely affected.
* This recommendation would benefit the system by $20
billion between 1984 and 1989.
Counting half of Social Security benefits as taxable
income for higher income recipients.
-- This aspect of the legislation will treat Social
Security benefits for high-income recipients in much
the same way as private pension income is treated under
the Internal Revenue Code.
-- This provision will affect only about 10% of OASDI
beneficiaries.
Advancing the current law Social Security tax increases.
-- These are not new taxes, but only minor accelerations
of taxes that are already in the law.
-- The taxes will have only a small effect on the overall
economy, but a major effect on the solvency of the
Social Security system.
O Delaying the COLA.
-- Social Security benefits will not be reduced in any way
whatsoever; increases in their levels will just be
postponed six months.
-- The current low rates of inflation ensure that the COLA
delay will have no significant adverse effect on Social
Security recipients.
-- Low-income elderly -- those receiving both Social
Security and Supplemental Security Income benefits --
will be further protected by an increase in the SSI
disregard provision from the present $20 to $50 per
month.
0 Increasing the self-employment Social Security tax.
-- This provision will put self-employed individuals on
the same basis as employees.
-- Previously, the self-employed had contributed less into
the system on their behalf than has been contributed
jointly by employers and employees on the latter's
behalf, but had received equal benefits.
Questions and Answers.
0 Fairness. Hasn't the Administration been callous in its
treatment of women and poor elderly people who depend on
the Social Security system for their survival?
-- Not at all. The legislation exhibits compassion toward
both of these groups.
-- The following provisions, which are primarily designed
to benefit women, were included in the reform package
even though these provisions add more cost to the
system at a time when savings are being sought.
The law previously permitted the continuation of
benefits for surviving spouses who remarry after age
60. The legislation permits the continuation of
benefits also for:
- Disabled surviving spouses aged 50-59.
- Disabled divorced surviving spouses aged 50-59.
- Divorced surviving spouses aged 60 and over.
Spouse benefits for those who have been divorced for
a significant period of time will be payable at age
62 or over if the former spouse is eligible for
benefits, whether or not the benefits have been
claimed or whether they have been suspended for
substantial employment.
The benefit rate for disabled widows and widowers
aged 50-59 at disablement will be the same as that
for non-disabled widows and widowers first claiming
benefits at age 60, instead of the lower amount under
present law. This change will be applicable to
beneficiaries of this category who are on the rolls
already as well as new recipients.
-- The legislation also demonstrates compassion for
elderly people who depend on Social Security benfits
for their livelihood.
No elderly recipient will have his or her benefits
reduced.
The inclusion of 50% of Soclai Security benefits as
taxable income for the elderly with substantial
outside incomes will affect only 10% of elderly
people -- those with the highest incomes -- whereas
a more general benefit reduction would have harmed
all redipients, including those with little or no
outside income.
Employee tax increases. How can the Administration
justify taking even more out of working men and women's
paychecks?
-- The speed-up in OASDI tax rate increases for employers
and employees affects only three calendar years.
*
In 1984, the tax rate will be 5.7% rather than the
5.4% scheduled under previous law. (The 1985-1987
rates will stay at the 5.7% level as scheduled under
the previous law.)
*
In 1988 and 1989, the tax rate will rise to 6.06%
rather than the 5.7% scheduled under the previous
law. (In 1990 and beyond, the rates will be 6.2%,
as mandated by present law.)
-- In 1984, a refundable income tax credit will be
provided against the individual's Federal income tax
liability so that he will pay no more in total than he
would have under present law.
-- For 1988 and 1989, the tax increase amounts to a mere
$1.38 per week for a worker earning $20,000 per year.
-- The amount of increase was minimized by two other
actions to make sure employees contributing to the
system are not unduely burdened:
*
The elimination of "windfall" benefits to individuals
who spend most of their working careers in noncovered
employment but who also become eligible for OASDI
benefits as a result of relatively short periods in
covered employment with other employers.
*
The requirement that self-employed workers pay an
amount equal to the combined employer-employee tax
rate.
0 General revenue financing. Aren't a number of the
legislation's provisions actually thinly-disguised means
of dipping into general revenues?
--- No. The Commission specifically rejected general
revenue financing of Social Security.
-- Specific provisions, while appearing to "dip into
general revenues," actually do not.
* The crediting to Social Security of income taxes on
half of some Social Security benefits: These
recipients would not even be a part of general
revenues were it not for the legislation.
The refundable tax credit in 1984: This is not used
to finance Social Security, but merely to ease the
tax burden faced by employees when the 1985 Social
Security tax increase is accellerated; it is thus an
equity measure.
The deductibility of the increased self-employment
tax: This provision merely conforms deductibility
for self-employed persons to that already enjoyed by
employers.
The military service credits have always been paid
out of general revenues, so paying the present value
of these long-standing entitlements does not
represent a new "tap" on general revenues.
*
Unnegotiated checks are trust fund monies held by the
Treasury, which are now being returned to the trust
funds.
SOCIAL SERVICES
History.
In 1909, President Theodore Roosevelt called for a
White House Conference on Children and Youth. Out of that
conference came recommendations to Congress concerning
services for children and youth, and, eventually, passage of
the Children's Bureau Act of 1912.
Since that time, the federal role in the provision of
"social services" has grown with the addition of various
titles of the Social Security Act of 1935. Today, the term
social services is used to include services not only for
youth but certain public services for families, the
economically disadvantaged, the elderly and the handicapped.
Programs.
-- Social services block grant.
*
Provides for various types of aid for the
disadvantaged, including child day care, child
protective services, foster care, homemaker services,
family planning, preparation and delivery of meals,
transportation, counselling, legal services, and
substitute care and day care for adults.
In FY 1973, the combined cost of the various
categorical programs was $1.6 billion. In FY 1981,
the last year before the programs were combined into
a block grant, the cost was $2.6 billion.
---- Rehabilitation services.
*
Makes grants to states for the vocational
rehabilitation of physically and mentally handicapped
individuals to help them become gainfully employed
and live more independently.
*
In FY 1973, the cost of rehabilitation services was
$699 million. In FY 1981, the cost was $1 billion.
-- Community service programs.
*
Provides aid to states through the Community Services
Block Grant to help the poor avoid or escape
long-term poverty, primarily through employment and
education.
*
In FY 1981, the budget for these programs was $619
million.
-- Family social services.
Provides aid to the states for foster care, adoption
assistance and a consolidated child welfare services
program that combines funding for child welfare
services and training.
In FY 1981, the budget for these programs was $506
million.
-- Services for children, youth and families.
These programs are designed to improve the quality of
services for low income, neglected, abused or
homeless children.
Funding in this area is almost entirely for one
program -- Head Start -- which assists community
groups in providing comprehensive services for
low-income pre-school children and their families.
In FY 1973, the cost of these programs was $916
million. In FY 1981, the cost was $1 billion.
-- Services for the elderly and other special groups.
Provides grants to state and local agencies that
offer a wide range of services for older Americans,
particularly those with the greatest needs. These
services include transportation, legal services and
the provision of meals served in a group setting or
delivered to the home-bound.
In FY 1973, $63 million was devoted to these
programs. In FY 1981, budget authority was $915
million.
-- Domestic volunteer programs.
ACTION and a small network of agencies attempt to
stimulate volunteer services though technical
assistance, demonstrations and small grants.
These programs provide personal aid to the poor, the
handicapped, the elderly, and other groups such as
Viet Nam veterans with special problems stemming from
military service.
In FY 1973, the level of spending for these programs
was $78 million. In FY 1981, the level was $150
million.
o Costs.
-- In FY 1973, the federal government spent $3.7 billion
to aid the disadvantaged with social services programs.
-- In FY 1981, the budget for these programs was $6.5
billion.
Administration Action to Date.
-- In FY 1982:
*
President Carter requested $7.2 billion.
President Reagan requested $5.8 billion, with
significant savings to be accomplished through the
proposed Social Services Block Grant.
*
Congress approved $6.1 billion, enacting the Social
Services Block Grant.
-- For FY 1983:
*
President Reagan requested $5.0 billion, with savings
to be accomplished through a proposed Child Welfare
Block Grant.
*
Congress approved $6.4 billion, failing to enact the
Child Welfare Block Grant.
The President's Proposals for FY 1984.
0 Social services block grant.
-- Maintain budget authority at $2.44 billion for 1984.
* Allow the states maximum flexibility to select the
activities that should be funded.
* Permit states to fund economic development, rural
housing programs and other activities previously
funded under the community services block grant,
which is in its last stage of phase-out.
Rehabilitation services.
-- Maintain budget authority at the 1983 level of $1
billion.
-- Simplify administration and increase state flexibility
in service delivery in the state grant program.
-- Base the distribution of one-third of the grant funds
to the states on their success rates at rehabilitating
severely handicapped individuals. Continue to
distribute the remaining two-thirds according to
population.
Community service programs.
-- Provide $3 million for the proposed close out of the
Community Services Block Grant.
Family social services.
-- Increase budget authority from the 1983 level of $560
million to $601 million in 1984.
-- Consolidate child welfare services and training
programs at the state level.
Services for children, youth and families.
-- Increase budget authority from the 1983 level of $940
million to $1.1 billion in 1984.
Services for the elderly and other special groups.
-- Reduce budget authority from the 1983 level of $1.2
billion to $1.1 billion in 1984.
-- Consolidate the Department of Labor's Senior Employment
Program and the Department of Agriculture's Elderly
Feeding Program into the Depratment of Health and Human
Services' Older Americans Program.
Domestic volunteer programs.
-- Reduce budget authority from the 1983 level of $129
million to $110 million in 1984.
-- Eliminate the VISTA program.
-- Reduce overhead costs at ACTION from the 1983 level of
$25.8 million to $18.1 million in 1984 primarily by
reducing staffing.
Justification (General).
Maximize state responsibility for planning and
delivering social services by giving them the flexibility
to design programs that best meet their citizens' needs.
-- 40% of social services spending would be through block
grants in FY 1984.
-- Legislative proposals will be submitted by the
Administration to give states more flexibility in the
aging and child welfare programs.
Maintain or expand coverage in those programs that
effectively serve the needy and foster self-sufficiency
while promoting management efficiency.
-- Increase Head Start enrollments in the most cost-
effective, high quality projects. Funding would be
provided to serve 424,900 children, 43,000 of whom are
handicapped.
-- Maintain the FY 1983 level of delivering 190 million
meals to some 9 million elderly persons each day.
-- Provide an array of services to more than 2 million
children and their families.
-- Provide monthly subsidies to families adopting more
than 3,000 children with special needs.
-- Continue to help states strengthen and unite families
and find permanent homes for children who need to be
adopted.
-- Continue reliance on volunteers to help the needy.
Over 500,000 volunteers help out in Head Start
classrooms, and another 300,000 serve meals to the
elderly.
Justification (Specific).
o Social services block grant.
-- Increased flexibility.
*
State and local governments are best equipped to
determine the needs of their particular communities,
to establish priorities, and to fashion and implement
programs to meet those needs in the most effective
and efficient way.
--- Permitting states to use social services funds to
support activities previously funded under the
community services block grant.
*
Social and economic needs are interrelated.
*
If dependency on government programs is to be
reduced, both social and economic needs should be
addressed.
Rehabilitation services.
-- The proposal to distribute a portion of the state grant
funds according to performance is intended to encourage
the states to concentrate more attention on the most
severely disabled and to apply methods that are the
most effective and the least time consuming.
Community services programs.
-- The provision of $3 million for the community services
programs is sufficient to close out activities funded
under the Community Services Block Grant.
-- This block grant is unnecessary because its functions
are all provided for under the Social Services Block
Grant.
Family social services.
-- The consolidation of service programs and training
programs at the state level is designed to give states
greater ability to apply resources where they would be
most beneficial.
-- The consolidation would also improve the effectiveness
of program administration. Presently, services are
provided at the state level while training programs are
the responsibility of the federal government.
-- The increase in budget authority would allow the states
to provide services to a greater number of people.
Services for children, youth and families.
-- The increase in budget authority for these programs --
slightly more than $100 million -- is primarily
intended to ensure than the Head Start program serves
at least as many children in FY 1984 as in the previous
year by offsetting the effect of inflation.
Services for the elderly and other special groups.
-- The slight reduction in budget authority reflects
improved program management and increases in voluntary
contributions; service levels would be maintained.
--- The consolidation of programs that are currently housed
in different federal agencies into one program would
further facilitate better administration.
O Domestic volunteer programs.
-- The proposed reduction in domestic volunteer programs
primarily reflects the elimination of the VISTA
program.
-- VISTA should be eliminated because:
* The agency is not cost-effective, especially when
compared to other domestic volunteer agencies.
- VISTA.
a) Expenditure per full-time volunteer: $6,700.00
per year.
b) Return on each $1 spent: $2.18.
- Retired Senior Volunteer Program.
a) Expenditure per full-time volunteer: $80.00 per
year, or 48 c per hour.
b) Return on each $1.00 spent: $7.00.
- Foster Grandparents.
a) Expenditure per full-time volunteer: $2,847.00
per year.
b) Return on each $1.00 spent: $2.50.
* The agency is less effective in meeting human needs
than are other volunteer programs.
* The agency's volunter level of 1,750 service years is
an insignificant portion of nationwide volunteer
service.
Questions and Answers.
o Reduction of the budget at the expense of the needy.
won't the cutbacks in social services programs drastically
reduce support for those who are most vulnerable in our
society?
-- In the critical areas, the President has not proposed a
reduction, but an increase in spending. Under his
proposal:
* Budget authority for family social services grants to
the states, which supports such programs as foster
care and adoption assistance, would be increased from
the FY 1983 level of $560 million to $601 million in
FY 1984.
* Budget authority for the children, youth and families
account -- primarily consisting of Head Start --
would be increased from the FY 1983 level of $940
million to $1.1 billion in FY 1984.
-- Under the President's proposal, at least as many
individuals will be served under these programs as in
the past.
* The number of Head Start enrollees would increase by
10%.
*
Though budget authority for programs that serve the
elderly will be reduced, service levels will remain
the same, due to improved management. The same
number of elderly individuals will cotinue to receive
meals.
0 Promoting family stability. Don't the Administration's
proposals undercut family stability by cutting back on
services that keep families together?
-- Sufficient funding is provided under the social
services block grant to enable states to continue
funding for day care at or above the FY 1983 level.
-- Ongoing programs that serve abused, neglected, runaway
and homeless youth are funded sufficiently to serve at
least as many as in the previous year. Two million
children and their families will receive counselling
and reunification services.
STUDENT FINANCIAL AID
History.
Federal student financial aid programs, now in the
Department of Education, were established to assist students
who might otherwise be unable to attend college because of
financial need. However, since their inception these
programs have expanded far beyond their original purpose and
now provide government subsidies to many undergraduate and
graduate students who can and should pay their own way.
o Programs.
Federal postsecondary student financial aid falls into
three major program areas:
-- Guaranteed Student Loans (GSL)
*
Established in 1965 to provide low-interest loans to
students from low- and moderate-income families.
*
The current program completely subsidizes interest
during a student's postsecondary education and any
interest above 9% after graduation.
*
In 1978, family income qualifications for obtaining
loans were abolished. In 1981, income qualifications
were added back only for students whose families
had incomes over $30,000.
-- Pell Grants:
*
Established in 1972 as Basic Educational Opportunity
Grants (BEOG) to provide direct aid to students with
demonstrated financial need.
*
Needs analysis provisions have been liberalized by
legislation in recent years to loosen eligibility
requirements and increase the size of awards.
-- Campus Based Aid:
* Includes:
- National Direct Student Loans (NDSL, begun in
1958), which provides loans at 5% interest.
- College Work-Study (begun in 1965), which pays 80%
of a student's salary in federally-approved work-
study programs.
- Supplemental Education Opportunity Grants (SEOG,
established in 1965), which provides direct grants
to needy students.
*
Eligibility is determined for the students by the
guidelines set by the federal government.
institution according to a need analysis using
Coverage.
-- 10 years ago, only 14% of college students received
government loans and grants, with nearly 60% of it
going to low-income families.
- Now, more than 40% of the nation's 12.5 million
degree-seeking college students receive such aid, with
significant amounts of aid going to students from
middle- and upper-income families.
o Costs.
-- Overall costs for postsecondary student financial aid
have grown enormously over the past 16 years. In 1965,
outlays for such aid were $250 million. By 1981, it
had soared to $6.5 billion, representing a 25-fold
increase.
-- Costs for GSLs increased seven-fold between 1977 and
1981, from $357 million to $2.5 billion.
-- Pell Grants costs increased more than 75% over this
period, from $1.4 billion in 1977 to an estimated $2.5
billion in 1981.
-- Campus-based aid rose from $963 million in 1977 to
$1.1 billion in 1981.
o
Administration Action to Date.
-- For FY 1982:
* President Carter requested $6.4 billion.
* President Reagan requested $5.7 billion in budget
authority, including program reforms as follows:
- Guaranteed Student Loans.
a) Require a needs analysis for all applicants.
b) Eliminate in-school interest subsidies for all
GSL borrowers.
c) Eliminate the administrative allowance of 10%
per applicant that was paid to the institutions.
d) Allow the Secretary of Education to collect on
all state guarantee agencies' unsecured defaults
after the Department of Education had paid
reinsurance claims.
- Pell Grants.
a) Increase the maximum award from $1,750 to $1,800
in FY 1982.
b) Require that a student contribute $750 to his
education before receiving a grant.
c) Raise assessment rates on family discretionary
income from 10.5% to 20%.
* Congress approved $6.6 billion, and acted on the
President's programmatic reform proposals as follows:
- Guaranteed Student Loans.
a) Approved the requiring of a needs analysis for
students whose families earn more than
$30,000, rather than for all students as the
President had requested.
b) Enacted a 5% origination fee on new loans rather
than approving the elimination of the in-school
interest subsidy.
c) Approved the elimination of the administrative
allowance of 10% paid to the institutions.
d) Approved the proposal to allow the Secretary of
Education to act on defaults held by the state
guarantee agencies.
- Pell Grants.
a) Approved the increase in the maximum grant to
$1,800.
b) Rejected the proposed self-help requirement.
c) Rejected the proposal to increase assessment
rates on family discretionary income from 10.5%
to 20%, and instead increased the rates to 11%,
13%, 18% and 25% on increments of $5,000 in
discretionary income.
-- For FY 1983:
* President Reagan requested $4.3 billion in budget
authority, including program reforms as follows:
- Guaranteed Student Loans.
a) Increase origination fee charged on new student
loans from 5% to 10%.
b) Require all applicants to demonstrate need.
c) Limit graduate and professional students to
borrowing from the less subsidized auxiliary
loan program, and increase the amount they would
be able to borrow in the auxilliary loan program
to $8,000 per year and $40,000 over five years.
- Pell Grants.
a) Reduce or eliminate benefits to the highest
income students by increasing the percentage of
discretionary income that families are expected
to contribute to the support of a student.
- Campus Based Aid.
a) Fund NDSL with funds received by repayments into
its $5 billion revolving loan fund; otherwise,
provide no new funds.
b) Provide no funds for SEOG except for funds
schools wish to transfer from their Work Study
funding.
c) Focus College Work Study assistance on the
neediest students from lower-income families.
* Congress approved $6.7 billion, but failed to enact
any of the President's programmatic reform proposals.
The President's Proposals for FY 1984.
0 Guaranteed Student Loans.
-- In line with declining interest rates and actual prior
year loan volume, reduce budget authority from the 1983
level of $3.1 billion to $2.2 billion in 1984, without
reducing loan volume.
-- Require that all students demonstrate need for
assistance, as opposed to the current practice of
applying a test only to students from families earning
$30,000 or more.
-- Increase loan origination fee from the current 5% to
10% of the loan for graduate students.
-- Require state grant agencies to return loan advances
they have received from the federal government.
o Pell Grants.
-- Increase budget authority from the 1983 level of $2.4
billion to $2.7 billion in 1984.
-- Require that all students contribute at least $800 or
40%, whichever is higher, of the cost of their
education before receiving a Pell Grant.
* The student contribution could be satisfied by
Work-Study, summer or part-time earnings, loans or
grants from private sources, or savings.
-- Raise maximum amount that a student can receive from
the current level of $1,800 to $3,000 in 1984.
0 Campus Based Aid
-- Increase budget for the College Work-Study program by
40%, from the 1983 level of $590 million to $850
million in 1984.
-- Request no new capital for the National Direct Student
Loan program. Through collections, $550 million should
be available for loans to 688,000 students in 1984.
0 Education Savings Accounts.
--- Permit the creation of special tax-exempt savings
accounts into which parents cound deposit money to be
used for their children's education.
-- Parents could deposit up to $1,000 per year per child.
-- Full use of these accounts would be available to
families with annual adjusted incomes up to $40,000,
with partial benefits available to families with
incomes up to $60,000.
Justification (General).
O Restore the primary role of the family and the student in
meeting the responsibility for postsecondary education
costs.
-- Because students and families are the primary
beneficiaries of education, they and not the taxpayers
should bear the major cost.
-- Yet:
* Despite increased family incomes, families
contributed 25% less to their children's education in
1981 than in 1978.
*
Under current law, students are able to assemble an
aid package that requires them to make no
contribution at all to their education.
Target federal education programs to the neediest
students.
-- The President's proposal to require that all applicants
for Guaranteed Student Loans demonstrate need will
ensure that GSL funds go only to those who really need
them.
-- The proposed changes in the Pell Grant program will
target more of the funds to students from families
that earn less than $12,000 per year.
* In 1981, 66% of the students receiving Pell Grants
were from families earning less than $12,000 per
year.
* In 1984, the percentage is expected to be 73%.
-- The proposal to offer complete use of Education Savings
Accounts to lower- and middle-income families, and to
begin the phasing out use between $40,000 and $60,000
is designed to make sure this program provides maximum
benefit to the families and students who need the help
the most.
Justification (Specific).
o Guaranteed Student Loans.
-- The reduction in budget authority for GSL primarily
reflects the substantial decline in Treasury Bill
rates, from 12.2% in 1982 to a projected rate of 8% in
1984.
* Still, total loan volume will increase; $7.2 billion
in loans will be made in 1984, as compared to $6.6
billion in 1983.
-- The requirement that all students meet the needs test
to qualify for GSLs will ensure that available monies
go to the students with financial need.
* If a family truly needs assistance, a needs test will
only confirm this, and not reduce their assistance
levels or deny them aid.
-- The higher loan origination fee is warranted because
graduate students can be expected, on average, to earn
a substantially higher income than the general
population, and therefore should be able to pay more
toward the interest costs of their subsidized loans.
Pell Grants.
-- The proposal to require a minimum contribution by the
student is intended to restore the primary roles of the
family and the student in meeting the responsibility
for postsecondary education costs.
* Under current law, schools and students can assemble
monies from as many as six different federal programs
to pay for education costs in ways that require only
a limited contribution from the family and none from
the student.
*
The proposed reform ensures that all students make at
least some contribution to their own education.
-- The proposed increase in the maximum possible award
will open up new opportunities for low-income students
to attend a wider range of schools.
O Campus Based Aid.
-- The additional funding for Work-Study will expand
student employment opportunities on the campuses, in
state and local government agencies, and in the private
non-profit sector.
-- Thus, students will be more able to provide their
expected self-help contribution to their education.
- The number of students participating in the
Work-Study program is expected to increase from
810,000 in 1983 to 1.1 million in 1984.
- The number of participating institutions is
expected to increase from 3,400 in 1983 to 3,600 in
1984.
With a 40% increase in the Work-Study budget, the
average award will increase from $725 in 1983 to $800
in 1984 -- exactly matching the expected student
contribution under the Pell Grant program.
Questions and Answers.
o Students losing aid. Will students lose aid under the
Reagan proposals?
-- Some students may lose their eligibility to receive
student aid. Those who do will be students from
families that are too affluent to qualify under the
needs test.
* Those who need aid will continue to receive it.
-- The reduction in the number of awards allows for an
increase in the size of awards to those with genuine
financial need.
* The size of the average Pell Grant award is expected
to increase from the current level of $968 in 1983 to
$1,300 in 1984 -- a more than one-third rise.
O Minimum contribution and neediest students. How will the
very poorest be able to provide the minimum contribution?
-- Needy students in particular would be eligible for aid
under the expanded College Work-Study program. The
money such a student earns in the Work-Study program
could be used to satisfy the minimum contribution
requirement.
-- The student is encouraged, however, to apply earnings
from summer employment and part-time employment, or
loans or grants from private sources, when available,
toward his own educational expenses. For many needy
students, this would be an active option as well.
O Education Savings Accounts. Aren't these proposed
tax-exempt savings accounts just another tax shelter for
the rich?
-- No. These accounts are designed to help families with
annual earnings below $60,000 per year to pay the cost
of their children's education.
-- Maximum tax benefits will be available only to families
with annual incomes below $40,000.
-- Even for a family in the 20% marginal tax bracket, the
tax savings amount to $200 per year per child -- a
significant contribution to the children's higher
education.
UNEMPLOYMENT COMPENSATION
History.
Unemployment compensation was first authorized under
the Social Security Act of 1935. It provides benefit
payments to those who lose their jobs through no fault of
their own.
Programs.
Unemployment Insurance:
*
Provides direct cash payments to individuals
temporarily out of work and looking for jobs.
*
Regular benefits are financed through a state payroll
tax on employers. Extended benefits are financed
one-half from state and one-half from federal taxes
on employers.
*
State and federal administrative costs are financed
by a federal tax on employers.
Benefit levels and the number of weeks a recipient is
entitled to receive benefits varies from state to
state. The benefit usually paid is 26 weeks for
regular benefits, and 13 additional weeks for
extended benefits in high unemployment states.
-- Trade Adjustment Assistance.
*
Provides training costs, and job search and
relocation allowances to workers whose loss of work
is attributed, at least in part, to foreign imports.
TAA also provides additional weeks of cash
unemployment payments for such workers.
*
TAA benefits equal the worker's weekly unemployment
benefits and are paid to those who exhausted all
their weeks of unemployment and were still not
working. Such workers can receive a total of 52
weeks of unemployment and TAA benefits combined.
Coverage.
For Unemployment Insurance:
*
About 97% of wage and salaried employment in the
United States is covered by unemployment compensation
programs.
*
An estimated 4.8 million workers per week will
receive unemployment benefits during 1983, and 3.4
million workers in 1984.
-- For Trade Adjustment Assistance:
*
From April 1975 to March 1981, 1.3 million workers
received TAA.
*
In September 1982, slightly more than 8,000 workers
were receiving TAA benefits.
Costs.
---- For Unemployment Insurance:
*
Total cost of benefits for this program are projected
at $32.7 billion for 1983.
-- For Trade Adjustment Assistance:
*
TAA cost $1.5 billion in 1981.
*
The Omnibus Reconciliation Act of 1981 reduced the
cash benefits portion of the program so that it cost
only $84 million in 1982.
Administration Action to Date.
-- For FY 1982:
* President Carter had proposed:
- To revise the calculation of the insured
unemployment rate ( "trigger rate") used to
determine when extended benefits are payable.
- To make unemployment insurance coverage of CETA
public service employees optional rather than
mandatory, and to prohibit the use of federal
public service employment funds to pay such
benefits.
*
President Reagan proposed:
- To target extended benefits on high unemployment
states through revisions in the trigger rate
calculation.
- To prohibit the payment of extended benefits to
those who did not work at least 20 weeks in the
year that made them eligible for unemployment
insurance.
- To require workers who had received 13 weeks of
regular benefits and whose prospects for returning
to their previous line of work were not good to
seek employment that provided wages at least equal
to their benefit amount, or the minimum wage,
whichever was higher.
- To terminate TAA effective September 30, 1983, and
in the interim to restrict its use to actual
employment adjustment problems.
- To make ineligible for Unemployment Compensation
for Ex-Servicemembers those who voluntarily left
the service, who were released or separated for
cause, or who failed to reenlist when they could
have done so.
* Congress approved:
- All of President Reagan's proposed reforms for
extended benefits.
- The proposed changes in Trade Adjustment Assistance
for workers.
- The basic eligibility changes in Unemployment
Compensation for Ex-Servicemembers.
-- For FY 1983:
* President Reagan proposed:
- To round down the weekly unemployment benefit
amount to the next lower dollar.
- To eliminate Trade Adjustment Assistance weekly
cash benefits and concentrate instead on training,
job search and relocation.
- To deny eligibility for unemployment benefits to
ex-servicemembers who are not given an opportunity
to reenlist becasue of a record of indiscipline or
failure to maintain skill proficiency.
* Congress approved:
- A change in federal payment to states for the 50%
federal share of extended benefits aimed at
encouraging states to round benefit amounts down to
the next lower dollar.
- (No change in TAA weekly cash benefits.) A change
in TAA certification criteria designed to make more
workers eligible for TAA benefits.
- An expansion in coverage under Unemployment
Compensation for Ex-Servicemembers that provides up
to 13 weeks of benefits (after a 4-week waiting
period) to those who complete their first full term
of service (and to others under certain
circumstances) and who are discharged under
honorable conditions.
- A change in the income threshold at which
unemployment benefits become taxable, from $20,000
(single person) and $25,000 (joint return) to
$12,000 (single) and $18,000 (joint).
CHICK With the President's support, a temporary program
of Federal Supplemental Compensation (FSC) that
provides additional weeks of unemployment benefits
to those who have used up all their weeks of
regular and, where available, extended benefits.
Originally enacted to last through March 31, 1983,
the program has twice been amended. At the
President's request, the program was extended
through September 1983 in the Social Security Act
amendment of 1983.
a) FSC as enacted provided up to 10 weeks of
additional benefits, but as amended it paid up
to 16 weeks. A six-month extension of the
program until September 30, 1983 provides up to
14 weeks of additional benefits for new
claimants, and up to 10 more weeks to those who
had used up all their FSC or were already
collecting it on March 31, 1983.
b) The number of weeks available varies by state
depending on the level of unemployment and
whether the state has paid or is paying extended
benfits.
* To supplement unemployment assistance over the
short-term, President Reagan proposed a bi-partisan
jobs bill with three major provisions.
- $4.4 billion in accelerated funding of construction
projects already in the budget, intended to be
spent in FY 1983.
- $5.3 billion to finance unemployment insurance
benefits.
- $216 million for humanitarian assistance for the
unemployed.
* Congress enacted:
- $4.4 billion in accelerated funding.
- $5.3 billion for unemployment benefits.
- $790 million in humanitarian assistance.
The President's Proposals for FY 1984.
Unemployment Compensation.
-- Provide outlays ot $24.6 billion in 1984 -- $8.1
billion less than 1983.
Job vouchers.
- Provide an option for FSC recipients to receive
assistance in securing work through a system of tax
credits to employers.
* Under the proposal, those eligible for FSC would have
the choice of receiving either the additional weeks
of unemployment compensation under FSC, or a set of
vouchers that would give anyone who hires them a tax
credit of equal value to the unemployment
compensation that would otherwise be paid.
*
The program would provide unemployment benefits from
April 1 through September 30, 1983, with tax credits
remaining available for jobs started by March 31,
1984.
*
The estimated benefit outlays for this proposal are
$2.8 billion in 1983.
*
The estimates of the tax revenue reduction for this
proposal are $453 million in 1984, and $97 million in
1985.
Unemployment insurance tax receipts.
-- Permit the states to devote 2% of their unemployment
insurance tax receipts to training, job search, and
relocation of unemployment workers.
Justification.
Smaller outlays for unemployment compensation.
--- The reduction in proposed outlays is based on an
expected decline in the unemployment rate from 10.2% in
FY 1983 to 9.3% in FY 1984.
Job voucher.
-- Workers who elect the voucher plan would receive full
wages, rather than unemployment benefits that are
designed to replace a portion (usually no more than
half) of lost wages.
-- The tax credit would give employers a strong incentive
to hire the long-term unemployed.
--- The unemployed would increase their prospects for
long-term financial well-being and employment by
working rather than remaining unemployed.
O Unemployment tax receipts.
-- Permitting states to use a portion of unemployment tax
receipts for training, job search, and relocation will
more rapidly and effectively increase the employability
of those out of work than the payment of unemployment
benefits alone.
- Moving people permanently off the unemployment rolls
and into private sector jobs will reduce long-term
federal spending.
-- Because state governments are closer to their own
unemployment problems, they can target assistance to
areas of greatest need.
Questions and Answers.
TAA phaseout. At a time when American workers are still
losing their jobs to imports, is it really fair to pahse
out TAA?
-- TAA has effectively been replaced by the Job Training
Partnership Act of 1982.
*
JTPA consolidates federal efforts to retrain all
displaced workers, whether they have lost their jobs
because of imports of because of some other reason.
The Administration has proposed spending $223 million
in FY 1984 to retrain displaced workers, more than
double the present amount.
This is a much fairer approach to the problem, since
it does not treat workers displaced by imports as a
privileged class of unemployed; being out of work is
bad, regardless of the cause.
Moreover, assistance can be made available faster,
since there is no need for a cumbersome bureaucratic
process to determine the cause of dislocation.
Vouchers. Will the Administration's voucher plan do any
good?
-- Given the significant tax break, employers will have a
strong incentive to hire the long-term unemployed.
-- The Administration estimates that the plan could help
as many as 700,000 unemployed persons get jobs.
#