(film reel clattering) - [Sandy] Welcome to today's Ethnic Media Services Zoom news briefing.

[background music] I'm Sandy Close, EMS director, and our topic today is President Joe Biden's proposed budget and the looming battles ahead that it will help define between now and the 2024 election.

Experts will explain the president's budget, an ambitious spending plan including repealing Trump's tax cuts for the wealthy, and increasing the corporate tax rate to pay to shore up Medicaid and Medicare, a permanent enhanced child tax credit, and environmental and educational priorities among other programs.

In addition, deficit reduction measures.

They will also examine Social Security's future.

Our speakers today include Chad Stone, chief economist [background music fades] at the Center for Budget and Policy Priorities; Elizabeth Lower-Basch, deputy executive director of policy at the Center for Law and Social Poverty, CLASP; and Andy Eschtruth, associate director for external relations at the Center for Retirement Research at Boston College.

We-- I'm happy to hand the moderation over to Sunita Sohrabji, a veteran reporter and EMS health editor, and we're both very eager to start today's discussion.

[audio distorts] Sunita, thank you.

- [Sunita] Thank you, Sandy, and welcome to our speakers and to our reporters.

We start our briefing with Chad Stone, who will present an overview of Biden's proposed budget and possibly delve into what the Republicans might propose for theirs.

Welcome, Mr. Stone.

- Oh, thank you.

Thanks so much.

I'm always happy to be invited back to one of these Ethnic Media briefings.

They're fun!

In talking about the president's budget, I think it's important to start with the reminder that the separation of powers in the Constitution gives Congress the power of the purse, with respect to taxes and spending.

The president's budget is a guide to the president's vision and desires, and power of persuasion, but Congress has no obligation to accept the president's proposals.

That said, President Biden has presented a visionary budget proposal which recognizes that meeting the needs of the United States in the 21st century requires more revenues and bolder program initiatives than we currently have.

The Democratic-controlled Senate likely will pass a budget if they actually get to doing a budget, (chuckles) that reflects that vision.

But, it won't be a rubber stamp of the Biden as we learned in the earlier proposals, where lots of good legislation got done, but it wasn't like the president said, "this is what I want," and Congress said, "here you are!"

(chuckles) So-!

Frankly, it's impossible to know what will happen in a Republican-controlled House where spending and taxing measures ultimately originate under the Constitution, because so far GOP rhetoric doesn't even honor the rules of arithmetic.

And, reckless and dangerous brinkmanship over substantively meaningless debt limits, something that has no real economic significance, is still an issue that could blow up everything.

We hope not.

Elizabeth will talk about safety net programs, I understand, and Andrew will address Social Security specifically, I believe.

For a broad view of the budget which is my responsibility here- 20,000 feet- (chuckles) I recommend Center on Budget and Policy Priorities President Sharon Parrott's statement on the president's budget, which is on the CBPP website, that explains how- and I'll quote almost the headline- "President Biden's 2024 budget moves us "toward a nation where everyone can thrive and share in the nation's prosperity", which will be a change from how things have been, by doing things like investing in people and communities, and, importantly, creating a 21st century tax system that supports these investments in a fiscally responsible manner.

The budget invests in children, supports for workers, housing affordability, education, and core government functions among others.

Big ideas for changing the way things have been going, and it finances these investments by raising taxes on high-income people and profitable corporations that have benefited the most from the nation's economy to date.

It also broadens opportunity, including among people and communities who have long been underinvested in, such as people with low incomes, people of color, indigenous communities, and people in rural communities.

That means the size of government measured by federal spending and revenues as a share of GDP, which is the measure of the size of the economy, could increase, but investments of the sort the president is proposing, done wisely will expand the size of the economy, as well.

In the president's budget revenues as a share of GDP or spending as a share of GDP, do not increase above historical levels.

But, you can have a bigger government if you-- that is fiscally responsible if you raise the revenues to pay for it.

We don't look like many European countries which provide much better safety nets.

So, an important part of the budget that is underappreciated, is the multitude of programs that are financed by annual appropriations that Congress has to vote on every year, rather than being financed by dedicated taxes like Social Security and Medicare- or to a large degree- these include national defense, but non-defense discretionary spending is where a lot of the funding to help people and communities can be found, including Social Security and IRS administrative costs, in each Social Security costs, administrative costs and IRS administrative costs.

So that when you call up Social Security you can get someone who can help you, and when you call up the IRS, you can get someone who can help you.

And, the IRS has some money that allows it to conduct audits on- many more audits on high-income individuals- where lot-- where lots of missing tax revenue can be found.

How all this will play out in the House is anybody's guess at this point, since we hear a lot of uninformed or arithmetically impossible rhetoric at this point.

And, it's quite possible that there won't be a budget process that-- normally the House and Senate pass their own budget resolutions, they get together to come up with the congressional budget resolution, which doesn't-- this doesn't need to be signed by the president.

This is a resolution, not a law.

And, that lays out the ground rules and the totals for various programs that Congress then proceeds to actually pass the laws that enact.

I am-?

I really don't know how things are gonna play out.

We live in interesting times!

(chuckles) Thank you.

- [Sunita] Thank you again for joining us.

We move on to Elizabeth Lower-Basch.

Elizabeth, welcome.

You are going to be discussing the safety nets which Chad mentioned briefly.

- Sure, thank you.

It's great to have the opportunity to be here.

And, yes, the budget does propose to make some really important investments in children, families, seniors, workers, particularly those with low and moderate incomes.

And, as one of the previous questioners raised, it's a particularly important moment, because a lot of the pandemic, our programs are winding down.

We know that costs for food, child care, healthcare are continuing to rise.

So, families are feeling the pinch.

As mentioned, the president's budget does propose to bring back the enhanced Child Tax Credit, which was rolled out in 2021 as part of the American Rescue Plan, and that since expired.

For six months, July to December 2021, parents who filed a tax return or a simplified form got monthly checks, $300-- Not "checks".

Most people got it by direct deposits, but got monthly payments of $300 for each child younger than six, $250 a month for children ages 6 to 17.

And then, they got the other six months worth of benefits when they filed their taxes.

This was fully refundable.

So, even if you had little or no earnings you got the full amount of the credit.

And, this was transformative.

It reduced child poverty nearly in half, and it particularly reached Black and Latino children who had been left out from the Child Tax Credit benefits historically.

As Chad mentioned, this was allowed to expire.

The president is still putting forward a proposal to have it going forward and particularly to make the refundable part of it permanent.

Another big proposal in Medicaid, which provides health insurance coverage, access to healthcare for tens of millions of low-income individuals and families.

There are some people who are still left out.

The president aims to close the coverage gap in the states that still haven't expanded it.

So, that reaches people without children as well as parents, some of who are low-income, but not quite low enough to qualify.

It's called the "coverage gap."

It would also require all states to expand Medicaid for postpartum women- people who just had babies- for 12 months.

This is now a state option.

Probably about two-thirds of the states have taken it up so far, but some states mostly for political reasons have not.

This would apply to everyone.

The budget also calls to invest an additional $150 billion over 10 years for seniors and people with disabilities, so that they can get care at home, or in community settings, rather than having to be cared for in a nursing home.

Budget provides a high priority on federal nutrition, food security programs, including school meals, the WIC Special Supplemental Nutrition for Women, Infants, and Children, the program that helps pregnant women and babies, particularly buy formula, buy healthy groceries, as well as SNAP, the Supplemental Nutrition Assistance Program.

This year the Farm Bill is up for reauthorization, and that's off-- usually a bipartisan bill.

So, the SNAP is actually one area where there might be some opportunity for legislation to actually happen, even given the divided Congress.

Some of the most striking proposals are in the space of care, both child care and paid leave.

The budget calls for a national paid family and medical leave program, which we have never had in the United States.

It would allow 12 weeks of paid family and medical leave for all workers so that they can step away, and still be paid while they're caring for a newborn, a sick family member, or for their own healthcare.

The child care and early childhood programs would also get large increases: $600 billion over 10 years for child care.

This is the largest investment that we've seen in a previous budget proposal.

It would serve an additional 16 million children with affordable child care, and four million four-year-olds could get proposed pre-kindergarten.

As indicated, these proposals do need to go through Congress in order to become real, and there certainly would be a lot of fighting and back-and-forth to get it.

These do build on proposals that, you know, didn't quite make it to the finish line last year, even when Democrats did control both the House and the Senate.

So, they'll definitely be more challenging to get through this year.

Although they are, polls say, very popular among both Democrats and Republicans.

In states that haven't expanded Medicaid, Medicaid expansion is very popular.

I think the pandemic really helped everyone understand how important child care is, and that you can't work, if you don't have child care if you have young children.

So, I think it does create strong messaging differences.

I will note just on that last question about student loan forgiveness, the widespread forgiveness that the president proposed is, as Chad noted, still caught in the courts, and has not rolled out.

But there's existing programs that provide public service loan forgiveness for people who work for the government, for nonprofits.

So, that includes people like teachers, and child care providers, and doctors.

And, that program's been around for a while, but it was previously very badly implemented, and lots of people who should have qualified weren't getting the forgiveness.

And, this is something that the administration has been working on and that it doesn't mean Congress to fix, because it's already authorized.

It just wasn't working.

And so, I do know that lots of people who have applied for loan forgiveness through that program are finally seeing their loans forgiven after many years.

(pause) - [Sunita] Yeah, and thank you, Elizabeth.

Our final speaker today is Andy Eschtruth.

Andy, welcome.

- [Andy] Uh, it's a-?

- [Sunita] Andy will be talking about Social Security which is an issue on so many of our minds.

So, welcome and thank you.

- I appreciate the opportunity to be here today.

So, thanks so much.

Yes.

So, just to-- and I'd be very interested in the questions on this one.

So, and there's not a lot of detail in the budget as some people know, in terms of Social Security, but I will touch on that.

So, I'm just gonna make just some general remarks about the program, and why it's in the news lately.

So, of course, Social Security is the backbone of the U.S. retirement and disability income systems in this country.

It currently provides inflation-protected benefits to more than 65 million people.

(computer beeps) Now, currently the program does have a long-term financing shortfall, which has been motivating discussions about ways to reduce or eliminate the financing shortfall, and that is one of the reasons why it's been top of mind lately, and got a lot of attention in the last few months and during the "State of the Union."

And so, I first wanna explain what the nature of this shortfall is.

So, under current law, if there were no policy changes to the Social Security program, the systems actuaries estimate that it could continue to pay full benefits until 2035, and at that point, again, if there were no changes made before then, the system could continue to pay about 80% of benefits based on incoming payroll taxes.

So, when people talk about the trust fund being depleted, that's the situation that I was just alluding to.

That's that 2035 date people estimate.

In the short term, over the next, say, 10 years or so, the program continues to pay full benefits just like it does today, but it's going forward it is going to face a financial imbalance.

So, that's important to note because there's a lot of confusion over what it means when you get to that 2035 date.

It's not as if there is no money coming into the program, or no benefits could be paid.

Policy options, of course, for shoring up the system they're really two choices, very straightforward.

You can increase revenues going in, and/or you can reduce benefits being paid out.

Sometimes people talk about raising the full retirement age, as if that were a third option, that it were not a benefit cut of some sort!

(chuckles) But, it-- just for clarity, from an accounting perspective, and a budget and a real-world perspective, if you were to raise the full benefit retirement age that is a form of a benefit cut to the program.

So, that's one of the things that comes up from time to time, and we always shake our heads when we see it being referred to as a third option, that's somehow different from benefit cuts and revenue increases.

So, that's important to point out.

Just to put the size of the shortfall into context, it represents about three point-- the current estimate is about 3.4% of taxable payroll.

Now, let me give you a little more clarity about what that means.

Currently, workers pay 6.2% of their wages into the Social Security system up to a maximum cap, and employers match that with 6.2%.

This covers both the disability and the retirement payments in the system.

To reduce-- if you were to use-- just, for example, if you were to use a tax increase to completely eliminate the shortfall, it would be raising taxes by 3.4%.

So, that would be 1.7% on the employee and 1.7% on the employer.

Roughly a 25% increase in the current taxes overall in the system, just to provide some context.

One thing that's important to point out.

So, the president's budget did not have a lot of detail about Social Security.

One thing I'd wanna start with, though, is something really important that Chad alluded to earlier, and that is the administrative spending for the system.

Now, this is a program which has been facing increasing caseloads over time, because the population is aging.

And, at the same time, the offices, like many places, were closed down for a while during the pandemic, and these together combined and forced quite a backlog, because the number of full-time workers at Social Security is actually smaller than it's been in a few decades.

So, you have rising workload combined with pandemic, combined with fewer staff, and you have backlogs.

This is especially an issue on the disability insurance side, because it takes more time and effort to rule on whether someone is eligible for those benefits.

So, one of the things the president's budget does, is it would increase by 10% that administrative budget of the program, and that would be used to deal with these backlogs to generally improve service throughout the agency, to be able to hire more people, to improve technology that workers work with, and improve services in that way that Social Security delivers.

With respect to the overall finances of the program, the president's budget did not go into any detail, other than to say that it was absolutely not going to propose any benefit reductions, and would fight any benefit reductions that were proposed by the Congress if that were the case.

And, that it would work with the Congress to strengthen Social Security by ensuring high-income workers pay more.

That was essentially the full extent of the statement on the Social Security program, in terms of any changes to the benefit structure or the tax structure.

I think one other thing I just wanna point out before taking questions is that it is important to think about any changes to Social Security in the context of the whole retirement system.

So, for example, many people don't have access to an employer-sponsored savings plan in the workplace.

That's a 401(k); certainly not traditional pensions which have largely gone away outside of the public sector.

And so, when you think about adjustments to the program you have take-- bear in mind what other resources people have for retirement.

That's just something that's important to consider in any discussion of this type.

- [Sunita] Okay.

So, I wanted to ask each of our speakers, what is your most important takeaway from the budget and from this conversation?

What would you like our reporters-?

What do you see as our leads, our headlines from this conversation?

Andy, I'll start with you.

- Survey after survey after survey confirms that people love their-- (chuckles) they like Social Security!

They like-- they, you know?

If anything, they wanna enhance benefits which is sort of interesting!

But, obviously, you have a financial imbalance, and you have to figure out a way to either to pay for what you're offering people.

So, I think that-- I'm just trying to push back against the misperception that I think some people have that the program is somehow headed into some serious problem or won't be around.

You get a lot of-- you do find people who say, "I don't think the benefits will be there for me," because they're concerned.

- [Sunita] Thank you.

Elizabeth, what would you like our takeaway to be?

- The main takeaway is that I think we do need to look at the impact of these programs on people's lives, and what the benefits of the programs, and how they improve our society, and grow our economy.

And, sort of the virtuous cycle from these investments, whether it's on child tax credit with kids, with families, or paid leave, child care.

These are investments in the future.

And, the setting, you know, arbitrary deficit reduction targets, and, you know-?

There's a study that the report, that the Congressional Budget Office just released that I think is super important, but it's just not possible to balance the- you know- cut deficits in half in a tight period, while also keeping Social Security and Medicare safe, while also continuing the tax cuts from the Trump era; that, like, the reason we have taxes is to provide the revenue that we need to support the programs that we need.

- [Sunita] Absolutely.

Chad, are you still with us?

- I'm still with you!

- [Sunita] There you are!

- I was worried that I can't answer this question, because I'm not!

(Chad laughs) I'm still glad to be here.

But, the budget system that-- the political system and the budget system are so broken right now, that it's really hard to make any reasonable predictions about where we're going.

I mean, that with the government is not-- I mean, the government will continue to function, but decisions that are guided by policy concerns, that are based in reality is-- [background music] (sighs) it's tricky because there's many more- seems to me- irresponsible politicians that are muddying the-?

It's hard enough for ordinary Americans to live their lives, and understand anything about the budget process, and when they're getting misinformation, it's even harder.

And, I just don't know how to-?

If I could just predict or wish for, I would like-?

Well, for-- if you're covering the news, be careful about your sources and what they're saying.

Be on guard for stuff that sounds too good to be true, or not firmly grounded in what's really needed, and what's actually being proposed, and does-?

Is a good case being made?

- Thank you all for joining us, speakers and reporters.

And, Andy and Elizabeth?

We hope you'll join us.

And, Chad, of course!

We know you're going to join us but Andy and Elizabeth, we hope [audio distorts] you'll join us again for a future briefing.

And, thank you again!

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