September 30, 2021
September 30, 2021
Welcome to Thoughts from Our Fellows, a collection of recent activity regarding the Academy's Grand Challenge of each Month. In September, the Academy focused on Advance the Nation's Long-Term Fiscal Health. Below you will find:
In November of 2020, the Academy published a paper on this topic as a part of its Election 2020 Project. The Working Group recommended the following actions for its paper, Building a Stronger Fiscal Foundation.
In addition to our Election 2020 papers, which focused on recommended actions for the first year of a new administration, the Academy also asked its Fellows
“What should federal, state, and local leaders do now and over the next few years to ensure fiscal sustainability? What should they prioritize?”
John Bartle: To achieve fiscal sustainability, where possible revenues should be tied to the benefits provided by expenditures. So for example, infrastructure can be financed by user fees, earmarked taxes, tax increment financing, and "value capture" that leverages private financing. The same is true for payments to individuals such as Social Security, Medicare, unemployment insurance, and workers compensation. Broader taxes such as income, sales and property taxes should fund public goods where there is no close tie between revenues and expenditures, such as redistributive programs.
Doug Criscitello: Fiscal sustainability is a long-term concept, so we need to be pursuing policies over the long run that not only move in the general direction of future primary deficit balance but also enhance economic performance, quality of life for all, and citizen trust in government. Elected officials would be wise to pursue those objectives by advancing policies that stimulate private capital formation, foster R&D, and develop critical public infrastructure – all with an eye towards strengthening economic growth and resulting opportunities for all Americans. To be sure, the notion of having a rising tide (in this case, of red ink) lift all boats evokes other omnipotent solutions offered through the years (e.g., tax cuts paying for themselves). But having a more productive economy may be a destination worth the journey. Unfortunately, we’re now headed into fiscal waters where there’s no proven chart we can follow to assure a safe voyage.
Katherine Willoughby: Much in the same way that scholars and practitioners at Minnowbrook 50 assessed the state of social equity in public administration research, teaching, and service (Blessett et al. 2018), so too today, public leaders at all levels of government must be called to action regarding fiscal sustainability. Below are several fiscal sustainability guidelines adapted from the Minnowbrook 50 principles regarding social equity. Similar to the “call to action” of social equity as envisioned by the 2018 conference participants, these guidelines can help move public leaders “beyond rhetorical acknowledgment toward meaningful action” regarding fiscal sustainability.
Season: 1 Episode:73 | September 28, 2021
Brookings: Cities are taking it slow with American Rescue Plan funds, by Alan Berube and Eli Byerly-Duke
When President Joe Biden signed the American Rescue Plan Act (ARP) into law last March, it was a momentous occasion for local governments around the country. In contrast to past federal fiscal relief efforts—including the CARES Act of 2020—ARP provided a large number of cities and counties with direct, flexible support from the federal government. And the sums on offer were substantial: $130 billion in Fiscal Recovery Funds (FRF) for cities, counties, and tribes, often amounting to significant shares of local governments’ annual budgets.
The Treasury Department began disbursing these dollars in May, requiring larger recipients to submit initial reports by this week on how they are allocating the dollars to address the impacts of the COVID-19 pandemic, and to “build back better” for the future.
In turn, many big cities are telling Treasury: We’ll get back to you on that.
Marketplace: Treasury says U.S. child care system is a market failure, by Kimberly Adams
It’s a busy month in Washington, with deadlines on the debt ceiling and government funding. Plus, there’s the Joe Biden administration’s ongoing efforts to get Congress to pass that big infrastructure bill and a budget reconciliation package that includes more of the “human” infrastructure agenda.
To push that last bit along, the Treasury Department released a study on the child care industry Wednesday, arguing that the system is basically in a state of market failure, with significant consequences for the overall economy.
Just about any parent who’s been on a waiting list for day care or a child care center has experienced those difficult economics.
Brookings: The new child tax credit does more than just cut poverty by Jason Jabbari, Leah Hamilton, Stephen Roll, and Michal Grinstein-Weiss
With COVID-19’s disruptions in employment, child care, and education, it is unsurprising that child poverty substantially increased in 2020—roughly 1.2 million more children were living in poverty in 2020 when compared to 2019 (an increase from 15.7% to 17.5%). As child poverty is unequally distributed in America, so too were its increases—poverty rates grew the most among Latino children (4.2 percentage points), Black children (2.8 percentage points), and children from female-headed families (4.1 percentage points), while they remained flat for white and Asian children.
In response to these trends, President Biden signed a bill this March that restructures the child tax credit (CTC) for one year—making it larger ($3,000 per child between the ages of six and 17 and $3,600 per child under six), broader (gradual phaseouts start at $75,000 for individuals and $150,000 for those married filing jointly), and more periodic (monthly payments). This restructuring would allow the CTC to act like a child allowance, which has been used in a variety of other countries. While the new CTC officially launched in July of 2021, policymakers are already considering whether or not to extend the new CTC beyond 2021. Here, policymakers are not only considering the impact that the new CTC will have on child poverty, but also the impact that it could have on family social mobility.
Marketplace: Loan forgiveness not coming easily for some PPP borrowers, by Kristin Schwab
Andrew Song’s restaurant and karaoke bar is a ghost of what it used to be. The shuttered business in Manhattan still has an outdoor dining structure up and a menu posted by the door. A phone sits on the dusty host stand inside.
After eight years in business, Song shut down Le Midi last summer, during the pandemic. Now, he’s left with debt.
The business got nearly $250,000 through the federal Paycheck Protection Program. His lender, Citibank, told him he has to pay back more than $25,000.
Song can’t figure out why. Was it something in his application? Did he not follow the program’s guidelines? Is he even liable for the money since his business closed?
“I couldn’t get a clear answer, and no one picks up phone calls, no emails are returned,” Song said. “It feels like you are dealing with a faceless organization.”
Route Fifty: Public works agencies hit by rising prices and supply delays,, by Bill Lucia
State and local agencies that build and maintain the nation’s streets, bridges and waterworks are getting squeezed by rising costs for materials and equipment, supply chain disruptions and workforce shortages—combined pressures that are threatening to take some punch out of pending infrastructure legislation in Congress and other boosted spending on public works.
Price increases and supply shortages are playing out across the economy and are in many cases linked to the turmoil the coronavirus outbreak caused. It’s likely these issues could fade as more industries recover and stabilize. Finding workers, like truck drivers and laborers, is a problem that agencies faced before Covid-19. But officials say the pandemic has made it worse, especially as private sector employers compete more aggressively in a tight labor market.
These factors are in some cases driving up overall construction and maintenance costs and causing places to question if they should scale back, or hold off on projects—at least for now.