More and More, the Safety Net Is for the Middle Class

Plus, Democrats' agenda for 2019 By Yuval Rosenberg and Michael Rainey Who's Using the Social Safety Net? More and More, It’s the Middle Class Middle-class families account for a growing share of social safety net spending in the U.S., according to a [report]( from the Brookings Institution Tuesday. The [Axios]( chart below, based on the Brookings report, shows the shift between 1979 and 2014 in the share of means-tested social welfare spending among different income groups. The “middle class” group (labeled “all other income groups” in the chart) is defined as the middle 60 percent of the income distribution — for a family of three, that includes those earning between $36,600 and $146,700 in 2014. That group accounted for about 23 percent of all means-tested social welfare spending in 1979 but about 46 percent in 2014, roughly matching the spending for the poorest 20 percent of families. The means-tested outlays include: - Medicaid - low-income subsidies for Medicare Part D prescription drug coverage - Children’s Health Insurance Program (CHIP) - food stamps (Supplemental Nutrition Assistance Program, or SNAP) - Supplemental Security Income (SSI, administered by Social Security) - Temporary Assistance for Needy Families (formerly called Aid to Families with Dependent Children) - cost-sharing reduction payments (created by the Affordable Care Act) - child nutrition programs - Low Income Home Energy Assistance Program - state and local assistance programs The biggest increase in spending share was seen in what the authors call the lower-middle class — families between 13 percent and 26 percent in the income distribution. But all middle-class income groups saw a rough doubling of their share of spending, and by 2014, $1 out of every $7 spent on means-tested programs was received by a middle-class family. Two of the big drivers in the increase, authors Richard V. Reeves and Christopher Pulliam found, have been Medicaid and food stamps. Families in the bottom 20 percent of the income distribution accounted for a substantial majority (71 percent) of Medicaid spending in 1979, but by 2014 accounted for a bit less than half — meaning that most Medicaid spending now goes to families in the top 80 percent of the income distribution. Age is another key factor. Examining just households headed by someone 65 or older, the authors found that “the middle class now takes up nearly 60 percent of the means-tested transfer pie—three times more than they did in 1979.” Rising health care costs play a big role, with Medicaid and subsidies for Medicare Part D accounting for much of the increased spending. Overall, the report highlights the increasing importance of transfer payments to middle-class households. “Safety net benefits have steadily grown as a proportion of income (after taxes and transfers) not only for the poorest, but for middle-income households too,” the authors concluded. Here’s What Democrats Want to Do if They Win Back the House in the November Elections Election Day is just over two months away, but Democrats — with [reason]( to be [confident]( that they can win control of the House — are already planning their legislative agenda for 2019. In addition to a slate of potentially dozens of [aggressive oversight hearings and investigations]( into the Trump administration, the initial agenda also includes legislative packages covering health-care costs, infrastructure investment and ethics and lobbying reform, Axios’ Mike Allen [reported]( Monday. On health care: The legislation would be divided into two areas, according to Axios, with one centered on lowering overall costs and reducing premiums and the other focused specifically on driving down prescription-drug prices. On infrastructure: The Trump administration’s plan — which calls for $200 billion in direct federal spending in hopes of spurring some $1.5 trillion in total investments from private, state and local partners — has gone nowhere. The Democrats will reportedly propose $1 trillion in federal infrastructure spending, with the plan being pitched “as a way to boost jobs and wages.” Despite pressure from the left wing of the party to push for a bold agenda and worry less about how to pay for it, House Democratic Leader Nancy Pelosi reportedly remains committed to reviving “pay-go” rules that would require new revenue or spending cuts to pay for the newly proposed spending. [Share this story →]( Why the IRS Still Doesn’t Have a Permanent Commissioner The highly charged confirmation hearings for President Trump’s Supreme Court nominee, Brett Kavanaugh, began on Tuesday. While the Senate could be occupied with Kavanaugh’s confirmation for weeks, Politico’s Bernie Becker reminds that IRS nominee Chuck Rettig is still waiting to be confirmed more than six weeks after the Senate Finance Committee approved him by a party-line 14-13 vote. Democrats objected to Rettig’s nomination in protest over a new IRS policy that they say will allow more foreign “dark money” to flow to political groups. “Senate aides from both parties say they still can’t offer a timeline as to when Rettig might be confirmed, with Democrats also using Rettig’s nomination to lash out at new Treasury and IRS rules limiting blue state workarounds to the tax law’s cap on state and local deductions,” [Becker writes](. The delay in confirming an IRS commissioner may not be a problem — yet — and chances are that Rettig will be confirmed along with IRS chief counsel nominee Michael Desmond, especially since, Becker says, “Democrats, historically more so than Republicans, have a vested interest in the IRS working as efficiently and as close to full potential as possible.” But it’s not clear when that confirmation might take place, and a significant further delay could rattle some nerves. “There’s the filing season, there are modernization issues — which they got more money for from Congress earlier this year — the next budget season, withholding tables, the administrative side of the building,” Jorge Castro, a former counselor to the IRS commissioner and former congressional tax counsel, told Becker. “All those stand to benefit from having an IRS commissioner in place sooner rather later.” [Share this story →]( Welcome back! We hope you had a rewarding Labor Day holiday and are ready for a busy few months. After today, Congress has just 10 legislative days to fund the government for fiscal 2019 and 62 days until the election. Tell your friends they can [sign up here]( to get their own copy of these newsletters and keep up with the latest developments. Email yrosenberg@thefiscaltimes.com with your feedback and tips. Or connect with us on Twitter: [@yuvalrosenberg]( [@mdrainey]( and [@TheFiscalTimes](. News - [Bob Woodward’s New Book Reveals a ‘Nervous Breakdown’ of Trump’s Presidency]( – Washington Post - [GOP Leaders Scramble to Avoid Pre-Election Day Shutdown]( – Politico - [One of Obamacare’s Big Experiments to Lower Costs Is Working Surprisingly Well]( – Vox - [Tax Foundation: Indexing Capital Gains Would Give 'Somewhat Modest' Boost to Economy]( – The Hill - [Don’t Look Now, but States Already Are Requiring Online Sellers to Collect Sales Taxes]( – Tax Policy Center - [Immigrants, Fearing Trump Crackdown, Drop Out of Nutrition Programs]( – Politico - [Tax-Law Changes You May Have Missed]( – Wall Street Journal (paywall) - [GOP Challengers Hit Vulnerable Dems Over Trump Tax Law Votes]( – The Hill - [Bed Sores, Neglect, Alleged Abuse: Inside One of the Lowest Rated VA Nursing Homes]( – Boston Globe - [Why Trump Cut Millions in Military Aid to Pakistan]( – Vox - [EPA Lacked Justification, Authority for Pruitt’s 24/7 Security Detail, Watchdog Finds]( – Washington Post - [Can You Spot the Deceptive Facebook Post?]( – New York Times Views and Analysis - [A Savings Model for Health Care Still Has Promise]( – Peter R. Orszag, Bloomberg - [Where Did Our Raises Go? To Health Care.]( – Robert J. Samuelson, Washington Post - [Hey, Democratic Socialists: More Big Government Won’t Fix What Ails Us]( – Will Marshall, Daily Beast - [The Tax Law Chuck Schumer Hates — but Used to Praise]( – James Carter and Peter Roff, New York Post - [To Save Medicaid, Put People to Work]( – Sally Pipes, Forbes - [Republicans' Medicaid Work Requirements Are Already Proving Disastrous]( – Kalena Thomhave, The Week - [Just When You Least Expect It — A Congress That (Sort of) Works]( – Patricia Murphy, Roll Call - [Trump’s Plan to Freeze Federal Pay Is Nothing but Government-Bashing]( – Washington Post Editorial Board - [Trump's Pay Freeze for Federal Workers May Be His Most Cynical and Self-Destructive Stunt Yet]( – Michael Hiltzik, Los Angeles Times - [Trump Promised Farmers ‘Smarter’ Trade Deals. Now He Has to Bail Them Out.]( – Catherine Rampell, Washington Post - [It’s Time to Give Prisoners a Big Raise]( – David C. Fathi, Washington Post - [Congress Isn’t Paying Its Interns Enough]( – Barbara A. Trish, Washington Post - [A Bogus Deal on Nafta]( – New York Times Editorial Board - [Vote in November to Protect Today's Prosperity]( – Washington Examiner Editorial Board - [How the U.S. Economy Turned Six Good Jobs into Bad Ones]( – Andrew Van Dam and Heather Long, Washington Post Copyright © 2018 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book](//thefiscaltimes.us1.list-manage.com/vcard?u=40d2c5373681f5cd830b6d823&id=714147a9cf) If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](