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EconomicPolicyInstitute January 26, 2011

Paul Ryan, the new House Budget Committee Chairman, has presented “A Roadmap for America’s Future,” containing proposals that would enrich the wealthy at the expense of the middle class. A new EPI Briefing Paper by Policy Analyst Andrew Fieldhouse outlines how the dismantling of social insurance programs combined with the middle-class tax hikes Ryan proposes would lead to “an unprecedented reversal of progressive U.S. tax policy.”

Ryan plan ignores the lessons of the Great Depression

The Ryan plan, Fieldhouse notes, proposes raising taxes only on those Americans making between $20,000 and $200,000, while slashing taxes for the wealthiest Americans. As a result, the middle-class would pay a higher average tax rate than millionaires. Fieldhouse notes that middle-class families earning between $50,000 and $75,000 a year would see their average tax rate jump to 19.1% from 17.7% under the Ryan plan, while families making more than 10 times that amount would see their taxes fall from 23.5% to 18.3%.

The Ryan plan places the entire burden of deficit reduction on spending cuts, which Fieldhouse notes would lead to an entitlement raid and “turn the clock back on the progress made since the Great Depression.”  Fieldhouse’s analysis was cited by Daily Kos.

Americans broadly oppose raising retirement age or reducing Social Security benefits

On January 18, EPI, together with Demos and The Century Foundation, hosted a discussion on the future of Social Security, where a group of researchers and pollsters presented data showing that the system is fundamentally sound under its current structure and that the projected 75-year shortfall is modest and could be fixed without reducing benefits. Research and polling data presented at the meeting revealed a broad disconnect between the way many policymakers view Social Security and the way the average American views it, as a foundation of the modern economy that should not be part of the deficit-reduction discussion. EPI Vice President Ross Eisenbrey noted that, far from spiraling out of control, Social Security costs are projected to peak in about 20 years, at 6.2% of GDP, up from 4.8% today.

How businesses exploit immigration policy

“Everyone knows U.S. immigration law is broken, but most people don’t know why,” EPI’s Eisenbrey wrote in a January 14 op-ed in The Hill. His piece explores how the current system rarely penalizes businesses for employing undocumented workers. “Employers have hired approximately 8 million undocumented workers since 1986, but only a handful of businesses have ever been punished,“ Eisenbrey wrote. “The law was designed to let employers rely on their employees’ fraudulent documents.”

Eisenbrey also notes that the H-2B guest worker visa program allows U.S. employers to import 66,000 foreign workers for up to three years, regardless of the state of the national or local job markets. “Despite 10 percent unemployment in many cities over the past two years, many landscape companies claimed they were ‘unable’ to find qualified laborers, hotels were ‘unable’ to find qualified maids, and restaurants were ‘unable’ to find qualified dishwashers,” Eisenbrey says. He also notes that even though more than one million U.S. construction workers are unemployed, U.S. employers have been importing welders and sheet metal workers from as far away as India: “Was it easier to find Indian workers than Americans? No, but it was cheaper.”

The future of employer-sponsored health insurance

EPI’s Director of Health Policy Research, Elise Gould, gave a presentation at the National Congress on Health Insurance Reform on January 20, examining the future of employer-based health insurance in the wake of health care reform. Although employer-sponsored health insurance has long been the principal source of health care coverage, the share of Americans receiving it has been falling for years. Late last year, Gould published a Briefing Paper showing that the share of Americans under age 65 that are covered by employer-based health insurance fell to 58.9% in 2009, from 61.9% in 2008, representing the ninth straight year of erosion in coverage.

Gould’s presentation provided important insights on how the various elements of health reform could affect employer-based health insurance by either increasing or decreasing participation by employees and employers.  While the long-term effect of health reform may be a reduction in employer-sponsored insurance overall, health reform provides high-quality, affordable alternatives through regulated and subsidized insurance exchanges.

Also in the news

–EPI International Economist Robert Scott weighed in on the New York Times’ online feature, Room for Debate, which posed the question, “Can the U.S. compete with China on green tech?” Scott stressed that the United States would not be able to compete “without fundamental changes in our support for these industries and our approach to trade.”

–A Huffington Post piece about the potential damage from a Korea-U.S. free trade agreement cited EPI estimates that such an agreement would cost 159,000 American jobs over the next five years.

The Economist cited EPI data in a piece about growing economic inequality.

–A Wall Street Journal blog quoted pollsters who attended EPI’s January 18 discussion on the future of Social Security.

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