Morning Must Reads: Asset Tests, Layoffs and The Race To Give Away Tax Dollars To Big Oil

On Wednesday, the Pennsylvania Department of Public Welfare submitted its final proposal to the federal Food and Nutrition Service for an asset test on SNAP benefits (formerly known as food stamps).

As the Department explains in its proposal:

The Department of Public Welfare has submitted its final plan to the Food and Nutrition Service (FNS) to reinstate the asset test for the Supplemental Nutritional Assistance Program (SNAP). The final proposal sets the limits at $5,500 for households (age 59 and under) and $9,000 for households with older Pennsylvanians (age 60 and above) or disabled individuals...The SNAP program takes into account both income and assets when determining an individual or family’s eligibility. Certain assets are exempt from the measurement, including but not limited to one’s home, primary vehicle, educational savings accounts and pension plans.

We are pleased the thresholds have been adjusted up to account for inflation but remain deeply skeptical of the efficacy of the proposed asset test. Asset tests are costly to administer and discourage families from saving. It is counterproductive to force low-income families who have suffered a job loss because of the economy or a major illness to spend down their assets in order to qualify for food assistance. This policy is especially harmful in today's economy with unemployment still high.

To understand just how ill prepared families are for an unexpected job loss or major illness, the Corporation for Enterprise Development (CFED) has developed an Asset and Opportunity Score Card. One of the measures in the Score Card is the liquid asset poverty rate:

Percentage of households without sufficient liquid assets to subsist at the poverty level for three months in the absence of income, 2009. The threshold used to determine the liquid asset poverty rate varies by family size. A family of three with liquid assets less than $4,632 in 2011 is asset poor.

According to CFED, 36% of Pennsylvania families are liquid asset poor. CFED has more on the problems with asset testing here.

It is important to remember that although the economy is adding jobs overall, new workers lose their jobs due to economic conditions each month, adding to the already deep pool of job seekers. The Philadelphia Inquirer reports AstraZeneca, with facilities in Delaware, is about to shed another 7,300 jobs worldwide. No word on how many of those job losses will be in Delaware or on how many of the workers affected live in the Philadelphia region.

The cuts announced Monday are the third set of layoffs since 2007 and will bring the three-part total to 28,900. The two previous rounds of layoffs involved 12,600 and 9,000 employees, respectively.

The company did not specify which locations would lose workers under the latest round of cuts other than to say layoffs would be in the supply chain, sales, administration, and research and development, with an estimated cost savings of $1.6 billion by the end of 2014.

The Associated Press reports that war has broken out between West Virginia, Ohio and Pennsylvania over who can give away more tax dollars to Shell Oil.

Pennsylvania, Ohio and West Virginia are trying to top each other with the sweetest package of tax breaks for Shell Oil Co., which plans to build a huge new petrochemical refinery in the region. But some are questioning why there's been so little public discussion over exactly what's being offered, and how the deals would impact communities and the region.

"Who's going to be paying for the roads?" asked Robert P. Strauss, a professor of economics and public policy at Carnegie Mellon University. "You have to think through very carefully what the additional costs will be."

The proposed plant, called a cracker in the industry, would take ethane out of natural gas and convert it into the basic materials for literally hundreds of consumer and industrial materials, including plastics, fertilizers and antifreeze...

Some are disturbed that states haven't released a more detailed economic analysis of the proposed tax breaks. "We have no idea how much the state is losing in revenue each year. Nobody knows," added Ted Boettner, director of the West Virginia Center on Budget and Policy. "It's about transparency and accountability. Is it clear to county officials, school boards, how much revenue is being foregone?"

Just in case you think throwing state tax dollars at individual companies while school districts are gearing up for another round of budget cuts is an isolated practice, here are two stories from just this week:

Comments

1 comments posted

I am one of these "new poor,"

I am one of these "new poor," a single mom trying to go to school full time, doing work study, collecting food stamps for the first time. We already have to reveal every detail of our financial lives. As I bump into these issues, I think about the larger policy issues at stake. It seems like no one is advocating for the poor very much and there is a lot of animosity directed at the poor by those who don't understand the issues. (As if we are robbing them! They want us to wear a badge of shame.)

I do believe the asset test will discourage people from saving for emergencies and from banking money that they receive. There is no assistance program for car repairs or a replacement appliance, but people still NEED them. (Let's really not debate about that, if you want someone to work and you begrudge them a working car, a refrigerator or washing machine, what sense does that make?) It's counterproductive, if the only way a person can afford these things is to go into debt. If we get our EIC, because we have been working and have kids to take care of, and put it in the bank for a rainy day, are we going to be penalized for that? If I take out a school loan to pay for expenses and put it in the bank, am I going to be penalized for that too?

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