Adrienne L. Fernandes-Alcantara
Specialist in Social Policy
In an increasingly global economy, and with retirement starting for the Baby Boomer generation, Congress has indicated a strong interest in ensuring that today’s young people have the educational attainment and employment experience needed to become highly skilled workers, contributing taxpayers, and successful participants in civic life. Challenges in the economy and among certain youth populations, however, have heightened concern among policymakers that some young people may not be prepared to fill these roles.
The employment levels for youth under age 25 have declined markedly in recent years, and the current recession may cause these levels to decrease further. Certain young people—including high school dropouts, current and former foster youth, and other at-risk populations—face challenges in completing school and entering the workforce. While the United States has experienced a dramatic increase in secondary school achievement in the past several decades, approximately 9% of youth ages 18 through 24 have not attained a high school diploma or its equivalent. In addition, millions of young people are out of school and not working.
Since the 1930s, federal job training and employment programs and policies have sought to connect vulnerable youth to work and school. Generally, these young people have been defined as being at-risk because they are economically disadvantaged and have a barrier to employment. During the Great Depression, the focus was on employing young men who were idle through public works and other projects. The employment programs from this era included an educational component to encourage youth to obtain their high school diplomas. Beginning in the 1960s, the federal government began funding programs for low-income youth that address their multiple needs through job training, educational services, and supportive services.
Today’s primary federal youth employment and job training programs are authorized under the Workforce Investment Act of 1998 (WIA, P.L. 105-220), and are carried out by the Department of Labor’s (DOL) Employment and Training Administration (ETA). Although these programs are funded somewhat differently and have varying eligibility requirements, they generally have a common purpose—to connect youth to educational and employment opportunities, as well as to leadership development and community service activities. Many of the programs target the most vulnerable youth, including school dropouts, homeless youth, and youth offenders. Based on funding and the number of youth served, the WIA Youth Activities (Youth) formula program and Job Corps are the largest. The Youth formula program provides an array of job training and other services for youth through what are known as local workforce investment boards (WIBs). Job Corps provides training in a number of trades at centers where youth reside. Another program, YouthBuild, engages youth in educational services and job training that focus on the construction trades. Separately, WIA’s pilot and demonstration authority has been used to carry out the Reintegration of Ex-Offenders program, which provides job training and other services to juvenile and adult offenders. Finally, the Youth Opportunity Grant (YOG) program, which was funded until FY2003, was targeted to youth who lived in select high-poverty communities.
This report accompanies two CRS reports—CRS Report R40930, Vulnerable Youth: Issues in the Reauthorization of the Workforce Investment Act; and CRS Report R40830, Vulnerable Youth: Federal Funding for Summer Job Training and Employment—and will be updated as warranted.
Date of Report: January 13, 2011
Number of Pages: 44
Order Number: R40929
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Jon O. Shimabukuro
Legislative Attorney
This report discusses legislative attempts to amend the National Labor Relations Act (“NLRA”) to allow for union certification without an election, based on signed employee authorizations. The Employee Free Choice Act (“EFCA”), introduced in the 111th Congress as H.R. 1409 and S. 560, would have allowed union certification based on signed authorizations, provided a process for the bargaining of an initial agreement, and prescribed new penalties for certain unfair labor practices. This report reviews the current process for selecting a bargaining representative under the NLRA, and discusses the role of the Federal Mediation and Conciliation Service in resolving bargaining disputes under that act. The EFCA has been introduced in the past four Congresses. During the 110th Congress, the measure was passed by a vote of 241-185 in the House. In the Senate, proponents of the EFCA fell nine votes short of the 60 votes needed to limit debate and proceed to final consideration of the measure. The EFCA is widely expected to be reintroduced in the 112th Congress.
Date of Report: January 12, 2011
Number of Pages: 10
Order Number: RS21887
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Thomas L. Hungerford
Specialist in Public Finance
Jane G. Gravelle
Senior Specialist in Economic Policy
Several reasons have been advanced for increasing the net capital loss limit against ordinary income: as part of an economic stimulus plan, as a means of restoring confidence in the stock market, and to restore the value of the loss limitation to its 1978 level. Under current law, longterm and short-term losses are netted against their respective gains and then against each other, but if any net loss remains it can offset up to $3,000 of ordinary income each year. Capital loss limits are imposed because individuals who own stock directly decide when to realize gains and losses. The limit constrains individuals from reducing their taxes by realizing losses while holding assets with gains until death when taxes are avoided completely.
Current treatment of gains and losses exhibits an asymmetry because long-term gains are taxed at lower rates, but net long-term losses can offset income taxed at full rates. Individuals can game the system and minimize taxes by selectively realizing gains and losses, and for that reason the historical development of capital gains rules contains numerous instances of tax revisions directed at addressing asymmetry. The current asymmetry has grown as successive tax changes introduced increasingly favorable treatment of gains. Expansion of the loss limit would increase “gaming” opportunities. In most cases, this asymmetry makes current treatment more generous than it was in the past, although the capital loss limit has not increased since 1978.
Capital loss limit expansions, like capital gains tax benefits, would primarily favor higher income individuals who are more likely to hold stock. Most stock shares held by moderate income individuals are in retirement savings plans (such as pensions and individual retirement accounts) that are not affected by the loss limit. Statistics also suggest that only a tiny fraction of individuals in most income classes experience a loss and that the loss can usually be deducted relatively quickly.
One reason for proposing an increase in the loss limit is to stimulate the economy, by increasing the value of the stock market and investor confidence. Economic theory, however, suggests that the most certain method of stimulus is to increase spending directly or cut taxes of those with the highest marginal propensity to consume, generally lower income individuals. Expanding the capital loss limit is an indirect method, and is uncertain as well. Increased capital loss limits could reduce stock market values in the short run by encouraging individuals to sell.
Adjusting the limit to reflect inflation since 1978 would result in an increase in the dollar limit to about $10,000. However, most people are better off now than they would be if the $3,000 had been indexed for inflation if capital losses were excludable to the same extent as long-term capital gains were taxable. For higher income individuals, restoring symmetry would require using about $2 in long-term loss to offset each dollar of ordinary income. Fully symmetric treatment would also require the same adjustment when offsetting short-term gains with long-term losses. This report will be updated to reflect legislative developments.
Date of Report: January 10, 2011
Number of Pages: 14
Order Number: RL31562
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Jane G. Gravelle
Senior Specialist in Economic Policy
Business tax cuts were part of the economic stimulus, included in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), provisions that were subsequently extended (in P.L. 111- 240 and P.L. 111-315) and expanded in P.L. 111-315. The major provision adopted was bonus depreciation; the recently expanded and extended bonus depreciation expires at the end of 2011. Extension of loss carrybacks was considered but ultimately limited to small businesses.
Bonus depreciations provisions were enacted in 2002, as increased interest in providing business tax cuts to stimulate the economy followed the terrorist attacks of 2001, which heightened concerns about an economic slowdown. Among the tax proposals discussed at that time were a corporate rate cut and an investment subsidy. A March 2002 tax cut contained temporary partial expensing (bonus depreciation) for equipment. Interest in this issue continued, including proposals by President Bush for reductions in taxes on corporations through temporary dividend relief, which were enacted in May 2003. The temporary bonus depreciation expired at the end of 2004. Dividend relief was extended through 2010 in legislation passed in 2006. Temporary bonus depreciation was also part of a recent fiscal stimulus package adopted in 2008 (P.L. 110-185) and 2009 (P.L. 111-5) and have subsequently been extended and expanded.
Some economists doubt the efficacy of fiscal policy in general even when a stimulus is needed, especially in an open economy and given the difficulties of achieving proper timing. Also, deficit financing of a tax cut has potential negative long run effects because it crowds out investment; a stimulus designed to increase investment spending (rather than consumption spending) would, if successful, reduce that negative effect. Investment subsidies had largely been abandoned as counter-cyclical devices over the last two decades, in part because of lack of evidence from statistical studies relating investment spending to the cost of capital. Some recent empirical evidence has found some larger effects, at least with some studies, although not enough to suggest that all of the tax cut is spent (especially with corporate rate reductions). Moreover, the average behavioral response identified in these studies may be larger than responses during a downturn when many firms have excess capacities, and planning lags may make investment responses poorly timed. Recent studies of the 2002 temporary investment stimulus tended to find it a relatively ineffective stimulus measure.
An investment subsidy has more “bang-for-the-buck” than a corporate rate cut (or dividend relief), since the latter benefits existing as well as new capital. A corporate rate cut is estimated to produce as little as two-thirds of the investment induced by an investment credit with an equivalent revenue loss. The historically most common investment subsidy is the investment credit, although the same effect could be achieved with accelerated depreciation or partial expensing. A temporary investment credit should be more effective than a permanent one, and a temporary investment credit could also be made incremental. (It is not possible to structure a permanent incremental credit.) One disadvantage of a permanent investment credit is that it distorts the allocation of investment and can easily produce negative tax rates. A 10% investment credit would produce negative tax rates in excess of 100% for short-lived assets. Arguments were made for a corporate tax rate cut because of estimated large effects on the stock market. These calculations are overstated because they do not account for the adjustment process and of interest rate increases. Given the uncertainty about the size of stock market effects or their beneficial effect on the economy, there is a case for not considering stock market effects an important factor in choosing an investment subsidy. This report will be updated to reflect major legislative developments.
Date of Report: January 11, 2011
Number of Pages: 17
Order Number: RL31134
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Karen E. Lynch
Analyst in Social Policy
The Child Care and Development Block Grant (CCDBG) provides subsidies to assist low-income families in obtaining child care so that parents can work or participate in education or training activities. Discretionary funding for this program is authorized by the Child Care and Development Block Grant Act of 1990 (as amended), which is currently due for reauthorization. Mandatory funding for child care subsidies authorized in Section 418 of the Social Security Act (sometimes referred to as the “Child Care Entitlement to States”) is also due for reauthorization. In combination, these two funding streams are commonly referred to as the Child Care and Development Fund (CCDF). The CCDF is the primary source of federal funding dedicated solely to child care subsidies for low-income working and welfare families.
The CCDF is administered by the Office of Child Care at the U.S. Department of Health and Human Services (HHS), and provides block grants to states, according to a formula, which are used to subsidize the child care expenses of working families with children under age 13. In addition to providing funding for child care services, funds are also used for activities intended to improve the overall quality and supply of child care for families in general.
Discretionary child care funds are subject to the annual appropriations process. Congress has passed a series of continuing resolutions to provide funding for FY2011, the most recent of which, P.L. 111-322, is scheduled to expire on March 4, 2011. Each of the continuing resolutions for FY2011 has maintained discretionary CCDBG funding at the FY2010 rate of $2.127 billion. This is $800 million below the Obama Administration’s FY2011 Budget request of $2.927 billion. However, it is the same level of annual discretionary funding the CCDBG received in both the FY2010 Consolidated Appropriations Act (P.L. 111-117) and the FY2009 Omnibus Appropriations Act (P.L. 111-8). The American Recovery and Reinvestment Act (P.L. 111-5) appropriated an additional $2.000 billion in one-time discretionary CCDF funding in FY2009.
The mandatory child care funding was directly appropriated (or pre-appropriated) for fiscal years 1997 through 2002 by the 1996 welfare reform law (P.L. 104-193), which enacted the mandatory component of the CCDF. Temporary extensions provided mandatory CCDF funding into FY2006. On February 8, 2006, a spending budget reconciliation bill was enacted into law (P.L. 109-171), increasing mandatory child care funding by $1 billion over five years (for a total amount of $2.917 billion for each of fiscal years 2006 to 2010). The Claims Resolution Act of 2010 (P.L. 111-291) provided a one-year extension of mandatory child care funding at the FY2010 level of $2.917 billion. Without legislative action, the authorization and funding for mandatory child care will expire at the end of FY2011. The Obama Administration’s FY2011 Budget called for mandatory child care to be reauthorized and funded at $3.717 billion in FY2011, an increase of $800 million over the level provided in the Claims Resolution Act of 2010. The FY2011 President’s Budget also called for all mandatory child care funding to be annually indexed for inflation beginning in FY2012.
Date of Report: January 10, 2011
Number of Pages: 32
Order Number: RL30785
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Posts
