John J. Topoleski
Analyst in Income Security
The Making Work Pay (MWP) tax credit provided a refundable tax credit of up to $400 for individuals and up to $800 for married taxpayers filing joint returns in 2009 and 2010. The MWP tax credit expired on December 31, 2010. As a result of the expiration of the MWP tax credit, some taxpayers are finding that the amount of their income tax withholding has increased in 2011. In 2009 and 2010, as a result of the implementation of the MWP tax credit, some taxpayers may have found that their 2009 and 2010 income tax refunds were lower than they anticipated or that they owed taxes when they were expecting a refund. This is because some individuals who were ineligible for the MWP tax credit nonetheless received it.
The MWP credit was implemented as part of the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) and provided a temporary tax credit in 2009 and 2010. Individuals received the MWP credit through lower income tax withholding throughout the 2009 and 2010 tax years. Ineligible taxpayers were not able to claim the tax credit on their 2009 or 2010 income tax filings, resulting in higher tax liability. The change in withholding tables may affect some pensioners take-home pay throughout the year, although their 2011 tax liability has not changed. Although the MWP tax credit was not extended, certain other ARRA tax provisions were extended and a 2% reduction in Social Security payroll taxes was implemented for 2011.
This CRS report describes how some taxpayers might be affected by the implementation and expiration of the MWP tax credit and which taxpayer groups might have had their income tax underwithheld. The report also describes the circumstances in which some workers may have received more under the Making Work Pay tax credit compared with the 2% reduction in Social Security payroll tax.
Date of Report: March 1, 2011
Number of Pages: 13
Order Number: R40969
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Mark Jickling
Specialist in Financial Economics
Rena S. Miller
Analyst in Financial Economics
In the wake of the financial crisis and unusual oil price volatility, new attention was drawn to the regulation of derivatives—and particularly toward the unregulated over-the-counter (OTC) derivatives market. What regulatory changes, if any, would reduce risks to the financial system from derivatives trading? A number of bills were introduced in the 111th Congress, and several congressional committees have held hearings. The Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) enacted a sweeping reform of derivatives trading and oversight and brought the unregulated OTC swaps market under the jurisdiction of federal regulators.
The 111th Congress proposals for reform ran the gamut from requiring all derivatives trading to occur on regulated exchanges—essentially shutting down the unregulated OTC market that exists today—to permitting OTC trading to continue, but with more disclosure and oversight. Some participants in the OTC markets have noted that the lack of transparency is in and of itself an attraction, allowing them to take large speculative positions without other market participants being aware of their identities or trading positions. In the crisis, however, this lack of transparency appears to have exacerbated fears about potential losses faced by financial institutions and made banks less willing to lend. Dodd-Frank requires that all OTC derivatives be reported to swap data repositories, and that key market information be made public.
Before Dodd-Frank, various derivative products were subject to different legal frameworks. The Commodity Futures Trading Commission (CFTC) was the lead federal agency, but the Securities and Exchange Commission (SEC), the Federal Reserve, and other banking regulators also had jurisdictional claims. Under Dodd-Frank, this regulatory complexity continues, with the SEC given jurisdiction over most security-based swaps, the CFTC regulating other swaps, and the other regulators in a variety of consulting roles.
A key OTC market reform is to mandate the use of central counterparties (CCPs)—or clearinghouses—to process derivatives trades and thereby hopefully reduce risk and increase transparency. (Such clearinghouses have long been a standard feature of the regulated futures exchanges.) The Dodd-Frank Act included an exemption from the clearing requirement for nonfinancial end-users, who use derivatives to hedge the commercial risks of their businesses.
Additional proposals focused on new record-keeping or reporting requirements for OTC trades; audit trails; position limits; large trader reporting requirements; and increasing regulatory oversight of trading. An additional important question, for which Congress’s tools may be limited, is how to ensure regulatory harmonization with other international markets, so as to avoid a “race to the bottom” in derivatives regulation.
The Dodd-Frank derivatives provisions are summarized in CRS Report R41398, The Dodd-Frank Wall Street Reform and Consumer Protection Act: Title VII, Derivatives, by Mark Jickling and Kathleen Ann Ruane. This report summarizes other derivatives legislation that was considered but not enacted by the 111th Congress, and it provides background on the derivatives market. .
Date of Report: March 3, 2011
Number of Pages: 43
Order Number: R40646
Price: $29.95
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Katelin P. Isaacs
Analyst in Income Security
Julie M. Whittaker
Specialist in Income Security
In July 2008, a new temporary unemployment benefit, the Emergency Unemployment Compensation (EUC08) program, began. The program’s authorization ends on January 3, 2012. EUC08 was created by P.L. 110-252, and it has been amended by P.L. 110-449, P.L. 111-5, P.L. 111-92, P.L. 111-118, P.L. 111-144, P.L. 111-157, P.L. 111-205, and P.L. 111-312. Most recently, P.L. 111-312 extends the authorization of the EUC08 program, but does not change the structure of the program or augment benefits. This temporary unemployment insurance program provides up to 20 additional weeks of unemployment benefits to certain workers who have exhausted their rights to regular unemployment compensation (UC) benefits. A second tier of benefits provides up to an additional 14 weeks of benefits (for a total of up to 34 weeks of EUC08 benefits for all unemployed workers). A third tier is available in states with a total unemployment rate of at least 6% and provides up to an additional 13 weeks of EUC08 benefits (for a total of up to 47 weeks of EUC08 benefits in certain states). A fourth tier is available in states with a total unemployment rate of at least 8.5% and provides up to an additional six weeks of EUC08 benefits (for a total of up to 53 weeks of EUC08 benefits in certain states).
All tiers of EUC08 benefits are temporary and expire the week ending on or before January 3, 2012. Those beneficiaries receiving tier I, II, III, or IV of EUC08 benefits before December 31, 2011 (January 1, 2012, in New York) are “grandfathered” for their remaining weeks of eligibility for that particular tier only. There will be no new entrants into any tier of the EUC08 program after December 31, 2011. If an individual is eligible to continue to receive his or her remaining EUC08 benefit tier after December 31, 2011, that individual would not be entitled to tier II benefits once those tier I benefits were exhausted. No EUC08 benefits—regardless of tier—are payable for any week after June 9, 2012.
On December 17, 2010, the President signed P.L. 111-312, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. P.L. 111-312 extends the authorization for the EUC08 program until January 3, 2012, and the 100% federal financing of the Extended Benefit (EB) program through January 4, 2012.
Date of Report: March 4, 2011
Number of Pages: 20
Order Number: RS22915
Price: $29.95
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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 the 112th Congress. 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. A Full-Year Continuing Appropriations Act for FY2011, H.R. 1, passed the House on February 19, 2011. If enacted, this bill would provide $2.088 billion in discretionary CCDBG funding for FY2011, a decrease of $39 million from the level funded by the FY2010 Consolidated Appropriations Act (P.L. 111-117) and $839 million below the Obama Administration’s FY2011 request of $2.927 billion. In the absence of enacted full-year appropriations legislation, Congress has passed a series of continuing resolutions (CR) to provide funding for FY2011, the most recent of which, P.L. 112-4, is scheduled to expire on March 18, 2011. This fifth CR for FY2011 funds the CCDBG at the rate of $2.126 billion, which is $1 million less than each of the four previous FY2011 CRs and $801 million below the Obama Administration’s FY2011 Budget request. This is $1 million below the 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 FY2012 Budget was released on February 14, 2011. The Budget calls for a $1.3 billion increase in child care subsidy funding in FY2012 (of which $800 million would be discretionary and $500 million would be mandatory). The Budget also calls for both the mandatory and discretionary child care funding streams to be fully reauthorized in FY2012.
Date of Report: March 4, 2011
Number of Pages: 34
Order Number: RL30785
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Oscar R. Gonzales
Analyst in Economic Development Policy
The Small Business Administration (SBA) administers several programs to support small businesses, including loan guarantee programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion.
Congressional interest in the SBA’s loan and contracting programs has increased in recent years, primarily because small businesses are viewed as a means to stimulate economic activity, create jobs, and assist in the national economic recovery. Many Members of Congress also regularly receive constituent inquiries about SBA loans, the loan guarantee programs, and special contracting programs and this report provides an overview of these programs. In addition, after the enactment of P.L. 112-1, the SBA’s authorization is scheduled to expire on May 31, 2011.
This report is designed to assist Congress in the event that it considers the reauthorization of the SBA by providing a summary and analysis of the SBA’s major programs, including changes made by the American Recovery and Reinvestment Act (P.L. 111-5) and the Small Business Jobs Act of 2010 (P.L. 111-240), and by referencing other CRS reports which examine these programs in greater detail.
Date of Report: February 23, 2011
Number of Pages: 24
Order Number: RL33243
Price: $29.95
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