Category Archives: Government

Mandates, Cost Curves and Obamacare

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by Bikna Huang

In March 2012, the United States Supreme Court heard oral arguments about the Affordable Care Act, popularly known as “Obamacare.”  The argument centered on the individual mandate provision, which (once implemented in 2014) would require every person to be covered by some sort of health insurance. The question for the Supreme Court to decide is whether Congress has the power to require millions of uninsured Americans to get health insurance.

According to many proponents of the law, including the Obama administration, Congress has the power to require the individual mandate under the Commerce Clause because the uninsured will still use health services which would have an impact on commerce. Opponents, however, argue that the individual mandate falls under the “general police powers,” which is only for states.

The government has argued that the individual mandate will reduce costs and lower premiums, which had been increasing at rates outpacing inflation for several years, because health insurance companies usually raise premium prices to cover unpaid expenses. However, many have argued that the individual mandate will increase premiums and the cost of health insurance. Jonathan Gruber, MIT economists, predicts that Obamacare would reduce costs for the young and the old and increase for adults in between.

Paul Clement, arguing in opposition to the individual mandate, stated that the individual mandate will cause insurance premiums to “skyrocket.”  The argument proceeds that the proof is there, we have already seen increases in health insurance premiums since passage of the Affordable Care.  However, as we noted, the individual mandate is still two years away, as it will not become effective until the law is fully implemented in 2014.  Confronted with that fact, opponents argue that health insurance will increase even more then, which is at odds with a central goal of Obamacare, providing affordable health insurance.  Of course, if the Obama Administration is correct and the Affordable Care Act’s requirement for health insurance brings in a younger healthier pool who currently forgoes insurance because they are younger and healthier and thus have less need for medical care, then premiums will decrease.  It will be interesting to see whether the individual mandate stands, and which side is correct about the cost, if it does.  We at TheFactFile.com will be watching.

Bikna Huang is an intern with TheFactFile.com who studies at CalPoly in San Luis Obispo, California.

The Student Loan Forgiveness Act of 2012

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The Student Loan Forgiveness of 2012

The Student Loan Forgiveness Act of 2012 was introduced in the House of Representatives by Representative Hansen Clarke (D-MI) on March 8, 2012 and referred to the Committees on Education and the Workforce , Foreign Affairs and Armed Services. Each of these committees will be holding public hearings and their contact information is available at the end of this post for those interested in obtaining more information directly from them.

The stated purpose of The Student Loan Forgiveness Act of 2012 is “to increase purchasing power, strengthen economic recovery, and restore fairness in financing higher education in the United States through student loan forgiveness, caps on interest rates on Federal student loans, and refinancing opportunities for private borrowers, and for other purposes.” There are several provisions of this act and below, we give an overview of those provisions along with examples of how they would work.

The 10/10 Loan Repayment Plan

This provision, which would be open to all eligible borrowers, creates a new income-sensitive repayment plan that sets annual payment limits at 10% of the amount by which a person’s income exceeds 150 percent of the poverty level. For example, using the federal poverty guidelines for the 48 contiguous states and the District of Columbia, the annual payment limit for a single person with adjusted gross income (AGI) of $35,000 would be calculated as follows:

$35,000 (AGI) – ($11,170 (the poverty level) x 150% (poverty level multiplier)) = $18,245 (the amount by which AGI exceeds 150% of the poverty level). That amount, $18,245, is then multiplied by 10% and divided by 12 to get to the monthly payment, which in this case would be $152.04.

To be eligible for this program, a borrower would have to be willing to allow the holder of the loan to review their income annually and agree to have payments automatically debited from a bank account.

Loan Forgiveness under the 10/10 and Other Repayment Plans

A second provision of The Student Loan Forgiveness Act of 2012 provides for three different forgiveness options, which we describe in more detail below by class of borrower.

Existing Borrowers

Existing borrowers who have already made 120 payments that meet the minimum requirements of the 10/10 Repayment Plan during the ten years prior to the enactment of The Student Loan Forgiveness Act of 2012 would have their entire remaining balance cancelled (this is similar to existing rules for federal employees—although that program lacks the retroactive portion).

Existing borrowers who have less than 120 payments credited to their account meeting the minimum requirements of the 10/10 Repayment Plan would have their outstanding loan balance forgiven once those 120 payments are made.

New Borrowers

For new borrowers, which the Act defines as those who take a new Federal Direct Loan after the enactment of The Student Loan Forgiveness Act of 2012, the 10/10 Repayment Plan will be available; however, the amount of forgiveness cannot exceed $45,520. Although there is a cap on forgiveness for new borrowers, interest rates on these loans are also capped at 3.4%.

Other Provisions

The existing repayment time for public service employees (mentioned above) is reduced to 60 months from the current 120 months, and public service employees are granted the same retroactive rights as other borrowers under The Student Loan Forgiveness Act of 2012. That means that existing public service employees who have made 60 payments that comply with the 10/10 repayment plan will have their outstanding loan balances forgiven.

Additionally, borrowers with private education loans would be able to refinance many of those loans as new Federal Direct Loans and thus be eligible to participate in the provisions of The Student Loan Forgiveness Act of 2012 as “new borrowers.”

In a previous post, we discussed the two sides of this debate and, while we do not usually come down on one side or the other, we do think that Representative Clarke has constructed a bill that will accomplish the goals it sets out to meet while addressing critics of outright forgiveness like Justin Wolfers. The Student Loan Forgiveness Act of 2012 requires borrowers to make the same number of payments required since the inception of the Student Loan program: 120 payments over ten years. Thus, there is a level of responsibility for the borrower. Under this plan, some people, such as those with low debt, high income, or a combination of the two, will easily pay off their entire loan in those ten years. Others with higher debt or lower incomes will not. However, no matter what the case may be, either immediately for those who have already paid or within ten years of graduation for others, they will know that their student loans will be paid in full and the money previously dedicated to those payments can be used as the act states to “start businesses, invest, or buy homes.”

 

The Committee on Education and the Workforce

Phone: 202-225-4527 Fax: 202-225-9571

 

The Committee on Foreign Affairs

Phone: 202-225-5021 Fax: 202-226-7629

 

The Committee on Armed Services

Phone: 202-225-4151 Fax: 202-225-0858

The Affordable Care Act Celebrates its Second Birthday at The Supreme Court

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Last week, the Affordable Care Act (ACA) celebrated its second anniversary, and today, the Supreme Court will take up arguments brought by states questioning whether the Federal Government has the right to require individuals to purchase health insurance policies.  The key issue is whether this mandate is justified by the Commerce Clause of the Constitution, as the Administration argues.

Ironically, the individual mandate itself is an idea that stems from a 1989 report from the conservative Heritage Foundation.  In that report, Stuart Butler (Heritage’s health care expert at the time) argued that under the “Heritage Plan” a mandate was necessary because “[s]ociety does feel a moral obligation to insure that its citizens do not suffer from the unavailability of health care. But on the other hand, each household has the obligation, to the extent it is able, to avoid placing demands on society by protecting itself… A mandate on households certainly would force those with adequate means to obtain insurance protection.”  This was, of course, a central element of Mitt Romney’s Massachusetts plan as well as his 2008 defense of this plan; in the 2008 ABC News debate, Governor Romney stated, “Here’s my view: If somebody – if somebody can afford insurance and decides not to buy it, and then they get sick, they ought to pay their own way, as opposed to expect the government to pay their way….And that’s an American principle. That’s a principle of personal responsibility.”

To assist with the complexity of this issue, we have posted a series of videos below from the Alliance for Health Care Reform.  The Alliance for Health Care Reform, is a nonpartisan, nonprofit group, that according to its mission statement, “does not lobby or take positions on legislation.”  In their statement accompanying the release of the videos to coincide with the second anniversary of the Affordable Care Act, the Alliance for Health Care Reform wrote something near and dear to TheFactFile.com (emphasis added), “Although the Affordable Care Act is two years old today, it’s obvious that millions of Americans don’t understand it. This is a bipartisan problem. So, believing that people should argue about policy but not facts, [The Alliance for Health Care Reform created] videos to help…explain…how the law affects” young adults, small employers, people on Medicare or Medicaid, uninsured with pre-existing conditions and primary care providers.  TheFactFile.com found these videos extremely informative and we hope our readers will as well.

YOUNG ADULTS (3:01)
featuring Sara Collins, vice president for the Affordable Health Insurance Program at The Commonwealth Fund

SMALL EMPLOYERS (3:40)
 featuring Terry Gardiner, vice president for policy and strategy at Small Business Majority

PEOPLE ON MEDICARE (3:04)
 featuring John Rother, president of the National Coalition on Health Care

PEOPLE ON MEDICAID (2:44)
 
featuring Diane Rowland, executive vice president of the Kaiser Family Foundation

UNINSURED PEOPLE WITH PRE-EXISTING CONDITIONS (2:44)
 
featuring Deborah Chollet, senior fellow at Mathematica Policy Research

PRIMARY CARE PROVIDERS (3:02) featuring Kevin Grumbach, MD, professor and chair of the Dept. of Family and Community Medicine at the Univ. of California, San Francisco

It’s Not Obama’s Fault That Crude Oil Prices Have Increased

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by Peter Van Doren and Jerry Taylor

Editors Note:   TheFactFile.com was in the midst of researching for a possible post on U.S. Oil Production when we came across the following piece by  Peter Van Doren and Jerry Taylor that captures the facts and the arguments perfectly.  Rather than re-inventing the wheel, we asked for permission to repost the following and the authors graciously agreed.  The original appeared in U.S. News and World Report (available here) and was also posted by the Cato Institute (available here).

Peter Van Doren and Jerry Taylor are senior fellows at the Cato Institute.

Added to cato.org on March 2, 2012

This article appeared in U.S. News & World Report on March 2, 2012.

Is President Obama responsible for spiraling price of gasoline? Republicans say yes, but the facts say no.

Why have gasoline prices increased since the start of the year? The simplest explanation is that the price of crude oil has increased. Specifically, the spot price for Brent (North Sea) crude has increased $16 a barrel since January. Given that there are 42 gallons to a barrel, that works out to a 38 cent increase in the price of a gallon of oil. Spot prices for gasoline trade in New York have increased about 41 cents per gallon over the same time frame. So there you go.

Why is the price of North Sea oil relevant to the price of gasoline in the United States? Well, we import gasoline refined in Europe from North Sea crude. Even though these imports constitute less than 10 percent of U.S. gasoline consumption, they are necessary to satisfy domestic demand and their price sets the market price for all gasoline regardless of whether other cheaper crude sources are used to refine most of our gasoline.

Why is the price of North Sea crude rising? One possibility is that supply is down. North Sea (British) production has been decreasing for some time. During the first quarter of 2007, it was 1.7 million barrels a day, or mbd. By the end of 2011, it was down to 1.1 mbd. Norwegian crude oil production has likewise decreased from 2.7 mbd in the first quarter of 2007 to 2.1 mbd at the end of 2011. And global demand is bidding up the price of crude oil from the North Sea and elsewhere.

Ironically, during the same time period, U.S. crude oil production has marched upward for the first time since 1971. Since the start of 2007, U.S. production has increased by 2.1 mbd. Sure, more domestic oil creates the possibility of fewer refined imports tied to the price of Brent crude, but given that the price of Brent sets the price for crude generally, the result would be more profit for domestic crude producers rather than significantly lower gasoline prices for Americans (not that there’s anything wrong with that).

So despite the popular perception of President Obama as anti-oil, domestic oil production is increasing for the first time since the Johnson administration. Alas, little of this has to do with the president. Prices increased from $22 in 2002 to just under $100 a barrel average in 2008 and supply has responded. President Obama is no more responsible for production increases than other presidents were responsible for production declines. Unfortunately, presidents get blamed for world market changes that occur during their time in office… but generally, they do not cause them.

Peter Van Doren and Jerry Taylor are senior fellows at the Cato Institute.

(See some related TheFactFile.com charts here)

Soaring Student Loan Defaults—What if Anything Can be Done?

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Recent news reports indicate that student loan delinquencies have reached more than $85 billion, with about 14 percent of all student loan holders being delinquent on their debt. The remaining 86 percent are either “paying as agreed,” in deferment, forbearance, or still in school.

Student loan debt is a persistent issue and was one of the clarion calls for the Occupy Wall Street movement. Thie increasing debt load of college students also spawned a national petition sponsored by Robert Applebaum that elicited a response from the Obama Administration last fall and more recently an official student loan complaint site from the Consumer Financial Protection Bureau.

The advocates in favor of student loan forgiveness argue that the stimulative effect on the economy of forgiving student loans would far outweigh any immediate loss from wiping out the debt. Supporters of this idea include Representative Hansen Clarke (D) of Michigan who has a bill pending in the 112th Congress to forgive student loans as a means of stimulus. Others, like Justin Wolfers, call forgiving student loans “the worst idea ever.” Mr. Wolfers’ argument is that, not only is it a bad idea to forgive student loans, it sets a bad precedent. Wolfers writes: “This is a bunch of kids who don’t want to pay their loans back. And worse: Do this once, and what will happen in the next recession? More lobbying for free money, rather than doing something socially constructive. Moreover, if these guys succeed, others will try, too. And we’ll just get more spending in the least socially productive part of our economy—the lobbying industry.”

The argument in favor of forgiving the debt rests primarily on the notion that freeing students from debt will allow them to become bigger consumers and in an economy that has more than 75% of its activity driven by consumer spending, more and bigger spending is important. There is another argument for proponents of forgiving the debt that would seem to have some support in at least one recent study. That argument is that forgiveness of student loans is akin to a tax rebate for people who actually do something “socially constructive” by putting in the time to get a college education.

That support comes from a recent Organisation for Economic Co-Operation and Development (OECD) country note on the United States that shows that college graduates in the United States “generate more public revenue” than college grads in any other OECD country. The OECD calculates that an average male college graduate in the United States contributes about $190,000 more public revenue than non-college educated men. (For women the figure is $90,000, and both are far above the OECD average of about $55,000 in spite of generally higher tax rates in other OECD countries). Thus, one could argue that forgiveness of up to $190,000 in student loan debt would be akin to a tax rebate for people who put in the time to go to college.

We would like to know what you think? Is forgiving student loans a good stimulus plan or is it just a giveaway to a bunch of would be freeloaders?

What is the “Doc Fix” and Why is It a Perennial Issue?

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Recent news coverage has focused on the so-called Medicare “Doc Fix,” so we thought we would take some time to explain what it is and why it comes up so often. The roots of the Doc Fix are in the Resource Based Relative Value Scale (RBRVS), a fairly complex cost-saving measure for Medicare enacted in 1997 that basically cuts physician reimbursements automatically to keep them in line with a congressionally established Sustainable Growth Rate (SGR). This year, the legislation to increase payments to doctors under Medicare was tied to the legislation for the payroll tax holiday (payroll taxes and premiums fund Medicare, so linking the two seems appropriate). In the past, these fixes have come as part of another spending bill, unrelated legislation, or as standalone measures.

How Congress accomplishes the fix is of less importance than the fix itself. That is because the fix relates to access: if Congress allowed the automatic cuts to go into effect, it is doubtful doctors would be able to accept Medicare as a method of payment and continue to stay in business.

In 2010, the fix averted a cut in the reimbursement rate of 21 percent for doctors, and this year the rate would have been cut by 27 percent. The fix this year is not in addition to the 21 percent, but rather a cumulative adjustment that includes the 21 percent from 2010. The reason for that is the underlying law, the RBRVS, has not changed; the fixes are always temporary in nature. Instead, its pricing targets under the SGR established along with the RBRVS system have changed so that reimbursements under the RBRVS would now be 27 percent lower than the basic market rate.

The problem for members of congress is that permanently fixing the fee schedule comes with a large cost. The Medicare Payment Advisory Commission (MedPAC), a congressionally established bipartisan commission that advises Congress on Medicare, has generally remained silent on this issue. But in October, MedPAC suggested a permanent fix to the SGR that would cost $200 billion over ten years with built in doctor payment raises of 2.2% per year. Congress has yet to act on that recommendation. Thus, until the underlying law is changed, or a correction is made permanent establishing a new baseline, the periodic Doc Fixes will continue.

Will Mortgage Settlement Avoid Repeating Obama’s Foreclosure Failures?

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by Paul Kiel ProPublica, Feb. 10, 2012, 10:55 a.m.

February 9, 2012, administration officials stood alongside state attorneys general to announce a $25 billion mortgage settlement. It was reminiscent of a big announcement by administration officials three Februarys ago involving an even bigger number: $50 billion. That money was supposed to go to the administration’s signature mortgage modification program, which eventually became HAMP.

Three years later, HAMP (the Home Affordable Modification Program) is widely considered a failure. That failure provides key context to yesterday’s announcement.

According to the state attorneys general and the administration, a major selling point of the new settlement is that it won’t repeat HAMP’s mistakes. This deal, they say, is different.

“If people are eligible for a loan modification, the banks won’t screw up those decisions anymore,” said Iowa Attorney General Tom Miller.

North Carolina Attorney General Roy Cooper made a rather pointed reference to HAMP: “I think strong, court-ordered enforcement with teeth distinguish this deal from those earlier efforts to help homeowners.”

As we’ve reported extensively over the past several years, homeowners seeking to avoid foreclosure by gaining a loan modification have often been frustrated by banks’ errors and delays. In the worst cases, the banks’ shoddy mortgage servicing has led to wrongful foreclosures. The errors have sometimes continued even after homeowners got an elusive modification.

When HAMP was launched, it came with the promise that mortgage servicers would have to abide by clear rules. The handbook laying out these rules now approaches 200 pages. But as we’ve detailed, enforcement of those rules has been lacking.

According to the state attorneys general, the settlement directly addresses that. The five big servicers — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial (formerly GMAC) —  that will sign on to the not-quite-finalized deal have agreed to follow a raft of new rules. Some of these rules, like how quickly a bank must respond to a homeowner’s completed modification application, come straight from HAMP.

What’s different this time, they say, is that there are clear consequences for rule-breaking. But plenty of questions remain, and only time will tell if the latest promises of mortgage-servicer accountability will be kept.

“The big picture is that these new rules are only good if servicers follow them,” said Alys Cohen of the National Consumer Law Center. “Enforcement will really matter.”

As critics like Firedoglake blogger David Dayen have pointed out, the new system relies to some extent on “self-assessments” by the banks to identify violations of the new rules. But Miller, the Iowa attorney general, notes that consumers will be able to complain to their state’s attorney general, who will make sure their complaints are heard.

The settlement does create a “monitor” who will have the power to impose penalties. The administration says a bank could be fined up to $1 million per violation and up to $5 million for repeat violations. But the details released so far don’t show how violations will be applied or counted. (If thousands of homeowners, for instance, have been wrongly denied modifications, will that be counted as one violation or thousands?)

HAMP came with no penalties for participating mortgage servicers that broke the rules. It was only in the past several months that the Treasury Department decided to address servicer noncompliance — by temporarily withholding the program’s subsidy payments. (As for the millions of dollars in incentives that Bank of America, JPMorgan Chase and the other servicers were paid over the previous years, they get to keep that.)

The settlement is not only supposed to have more sticks than HAMP, it’s also a chance for the administration to breathe life back into the old program. Treasury recently made major revisions to HAMP to allow more homeowners to qualify for modifications.

“The extension and expansion of HAMP are designed to be complementary to the settlement,” said Treasury spokeswoman Andrea Risotto.

For instance, the program was set to end at the end of 2012 but now will accept new homeowners until the end of 2013. (The banks will operate under the umbrella of the settlement through 2014 or so.) In addition, Treasury has broadened some of the criteria to make it easier to qualify.

Some of the millions of homeowners who were rejected might be eligible for a second shot. Hundreds of thousands of homeowners were originally granted “trial modifications” through the program in 2009 and early 2010, only to be denied permanent modifications many months (and sometimes more than a year) later. Most of those homeowners started those trials by just giving their income information over the phone. They’ll be eligible to reapply, according to the proposed rules.

One of the recent changes to HAMP could reduce the cost of the settlement for banks — and leave taxpayers footing a chunk of the bill.

As part of yesterday’s deal, the five banks agreed to reduce billions in mortgage debt for homeowners in danger of foreclosure. Most of those principal reductions — about 85 percent according to Housing and Urban Development Secretary Shaun Donovan — will likely be for loans that the banks hold on their own books.

HAMP also has long offered investors incentives to encourage principal reductions. For loans owned by banks, the money goes right to them. In January, Treasury tripled those incentives. In cases in which a loan qualifies for HAMP, the government will now pay investors, often the banks themselves, up to roughly two-thirds the cost of a principal reduction.

The banks have agreed to perform at least $10 billion worth of principal reductions as part of the settlement. Because it’s unclear how many of the principal reduction modifications will be done through HAMP, it’s impossible to say how much of that will be covered by the government subsidies.

So far, about 40,000 HAMP modifications have been done through HAMP’s principal reduction program at a median reduction of $67,196, meaning that roughly $2.7 billion in principal has been reduced. If the banks find HAMP more attractive because of the increased incentives, that amount might increase sharply, and HAMP could experience something of a renaissance.

 

Minority Representation in Government: The Times They Are Changing, or Are They?

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Black History Month

Yesterday marked the start of Black History Month, and to celebrate we decided to look at how things have changed since 1968 (when most scholars agree the second phase of the Civil Rights movement ended). One way of looking at the question is to see how representative government is of African Americans today compared with then.

In 1968, the United States population was 11.1% African American, compared to 12.9% today. But in terms of representation in Congress, African Americans made up a mere 1.4% of the House and 1% of the Senate in 1968. In the subsequent 44 years, representation has improved significantly in the House, where it increased to 9.9%, while actually worsening in the Senate, where there is currently not a single African-American Senator. The chart below shows representativeness of Congress then and now:

 

In short, the results when looking at the legislative branch are mixed, with the racial make-up of the Senate being extremely homogenous, and the House being much more diverse.

But what about the other branches of government? In 1968, there were eight white men on the Supreme Court and one African American man. Today, the Court is far more diverse, with five white men, two white women, one African American man, and one Hispanic woman. Interestingly, the Hispanic woman and one of the white women were appointed by the first African American president in the history of the United States, Barack Obama.

Clearly, America has come a long way in opening up the branches of government to minority representation over the past 44 years. At the same time, one look at the Senate shows just how far we have left to go.

One Year Later: Grading Obama’s 2011 State of the Union Address

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Tonight marks President Obama’s third—and possibly final—State of the Union (SOTU) address, but before focusing on his ambitions for 2012, we wanted to look back at his pledges from last year’s address. As many of you remember, last year’s SOTU came not only at the start of divided government following the Democrats “shellacking” in the 2010 elections, but also just over 2 weeks following the shooting of Gabrielle Giffords in Tucson, Arizona. In this context, Obama called for unity and cooperation among the two parties: “We will move forward together, or not at all – for the challenges we face are bigger than party, and bigger than politics.”

We all know how well that went. But what about the other pledges from last year’s speech? To rate Obama’s success in accomplishing his 2011 goals, we first went back to the speech to parse out his concrete policy proposals. Broadly speaking, his speech focused on 8 primary themes: (1) investment for the future (including research, technology, education, and physical infrastructure); (2) the U.S. tax code; (3) government regulations; (4) the federal deficit; (5) the organization and transparency of the federal government; (6) immigration policy; and (7) foreign policy. Out of these themes, we pulled out the most significant (and specific) policy proposals:

 

Policy Proposal: Increase investment in biomedical research, information technology, and clean energy technology.

Result: Success. The President’s FY2012 budget requested targeted increases in spending on research at the National Science Foundation (NSF), National Institutes of Health (NIH), and the Department of Energy (DOE). Ultimately, Congress approved a 2.5% increase for the NSF (appropriating $7.03 billion for FY2012), with research and related activities increasing by 2.8%. For the DOE, the enacted budget brought a 2.5% increase for energy innovation investment-related Offices and programs. Finally, while funding for NIH as a whole remained flat, funding for the National Institute of Biomedical Imaging and Bioengineering (an Institute within NIH) increased by 8.0 percent.

 

Policy Proposal: Eliminate subsidies given to oil companies in order to free up money for investment in clean energy.

Result: Failure. Despite the attention these subsidies have been received in Congress and in the media, Big Oil continues to receive approximately $3.6 to $4.5 billion a year in tax breaks and other advantages.

 

Policy Proposal: Begin talks on comprehensive immigration reform.

Result: Failure. Despite speeches from the President that “[w]hat we really need to do is to keep up the fight to pass genuine, comprehensive reform,” Congress has shown no interest in taking up the issue.  And it is extremely unlikely that any headway will be made during an election year.

 

Policy Proposal: Replace No Child Left Behind with “Race to the Top”.

Result: Failure. Despite attempts at comprehensive education reform, Congress has been unable to agree on how to rewrite No Child Left Behind (NCLB). However, with the law’s toughest sanctions for underperforming schools right around the corner, the Administration is expected to allow states to opt out of No Child Left Behind in the coming months.

 

Policy Proposal:  Make the tuition tax credit permanent.

Result: Failure. The American Opportunity Tax Credit was not made permanent, and is still expected to expire in December 2012.

 

Policy Proposal: Simplify the tax code by getting rid of the loopholes and use the money to lower the corporate tax rate.

Result: Failure. Simplification of the tax code received a significant amount of attention in talks on reducing the fiscal deficit—it’s one of the only possible ways to increase revenue that Republicans seem amenable to—, but to date neither the tax code nor the corporate tax rate has been changed.

 

Policy Proposal: Review government regulations in order to find rules that put an unnecessary burden on businesses.

Result: Success. In addition to Executive Order 13563 on Improving Regulation and Regulatory Review, the President called for a government-wide review of existing regulations. The draft plans were released to the public for discussion, and the final plans were published here.

 

Policy proposal: Develop a proposal to merge, consolidate, and reorganize the federal government.

Result: Work in progress. After inaction for all of 2011, President Obama requested (on January 13, 2012) the authority to reorganize government.

 

Policy Proposal: Increase government transparency by introducing a website where Americans can see how and where tax dollars are being spent.

Result: Success. A new online tool called “Your Federal Taxpayer Receipt” has been in place since April 15, 2011.

 

Policy Proposal: Pass the free trade agreement with South Korea.

Result: Success. The agreement was approved by both the House and Senate in October 2011.

 

Policy proposal: Bring troops home from Afghanistan in July.

Result: Work in progress. In June 2011, the President announced the withdrawal of 10,000 troops from Afghanistan by the end of 2011, and a total of 33,000 troops by the end of 2012.

 

In short, while President Obama achieved a number of his policy goals, the most significant ones (i.e., tax reform and comprehensive immigration reform) went unfulfilled. And given that 2012 is an election year, it is highly unlikely that more progress will be made this year than last.

 

The Size of the Federal Workforce: Rapid Growth for Some, Stagnation for Others

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Since the 2010 elections, the federal workforce has frequently found itself at the center of the debate over government spending. The argument is often made that the number of federal workers has been growing unabated since President Obama came to office, resulting in a serious strain on the federal budget. As a result, members of both the House and Senate have recently introduced bills that call for a reduction in the federal workforce by 10% over 10 years through attrition (e.g., by allowing agencies to hire only one new employee for every three that retire).

Given the tremendous amount of attention directed to this issue, we wanted to look at what the data have to say. Specifically, this article addresses the following questions: (1) has the federal workforce expanded in the past 10+ years; (2) if so, has this expansion been equally distributed among all government agencies; and (3) moving away from a look at only the sheer numbers of federal workers, has the federal workforce grown as a percentage of the total civilian workforce?

In order to answer the first question, we turned to data from the Office of Personnel Management on the number of federal employees from 1998 to 2011. As the chart below shows, the number of federal employees has clearly been trending upward in recent years: from September 2007 to September 2011, the number of federal employees increased by 267,885, or 14.4%. While much of this expansion has taken place under President Obama, it began in the final year of the Bush presidency, with an increase from September 2007 to September 2008 of 4.1%.

 

Source: FedScope, Office of Personnel Management (http://www.fedscope.opm.gov/employment.asp)

 

But has this growth in staffing been equally distributed among all federal agencies? The following chart looks at the trends in cabinet-level staffing from September 1998 to September 2011, separated by agency:

Source: FedScope, Office of Personnel Management (http://www.fedscope.opm.gov/employment.asp)

 

By looking closer at the data, a number of things jump out. First, the Department of Defense is by far the largest employer among cabinet-level agencies, making up 40% of all federal employees. Second, the growth in the size of the federal workforce is concentrated in just a few agencies, with Defense, Veterans Affairs, and Homeland Security seeing the largest increases in staffing. Other agencies, such as the departments of Agriculture, Housing and Urban Development, and Treasury, have seen much slower growth in staffing levels; the Agriculture staff, for example, has seen a growth in staff of just 0.96% since 2007.

Finally, the last issue we wanted to address was how the size of the federal workforce compares to the entire civilian labor force. The next two charts use data from the Bureau of Labor Statistics to look at federal employees as a percentage of the total civilian labor force. (To be consistent with the OPM data on the number of federal employees, we’ve taken the figures as of September of each year). The only difference between the two charts is the scale of the axes.

Sources: FedScope, Office of Personnel Management (http://www.fedscope.opm.gov/employment.asp); Bureau of Labor Statistics (http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref1)

 

Sources: FedScope, Office of Personnel Management (http://www.fedscope.opm.gov/employment.asp); Bureau of Labor Statistics (http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref1)

 

Viewed from this perspective, the federal workforce has remained remarkably stagnant over the past decade: both in September 2001 and in September 2011, federal workers represented 1.26% of the total civilian labor force.

In sum, the data on recent trends in federal employment show that while the size of the federal workforce is growing, its proportion of the total civilian labor force is not. Federal employees have remained at or around 1.2% of the total labor force for at least a decade and, given the hiring freeze that has been in place in many agencies, are unlikely to grow much higher. Furthermore, the increases in staffing that we have seen are largely concentrated in just a few agencies. At the very least, this suggests that a one-size-fits-all approach to reducing the federal workforce could have disproportionate effects on some agencies more so than others.