By Sharon Ward, Third and State

Tell us what you think about the Fiscal Cliff deal. Take our two-question survey.

The agreement reached by President Obama and Congress on January 1 was both historic and disappointing — and it leaves much unsettled. The urgency of the Fiscal Cliff has dissipated, but significant threats remain to federal funding for state and local services as well as refundable tax credits for low-income working families, Medicaid, Medicare and Social Security.

There is much to dislike in this agreement. It makes permanent most of the Bush era tax cuts, ensuring that income from dividends and capital gains will be taxed at a lower rate than income from work. It makes permanent the estate tax but locks in a tax rate that creates a huge windfall for the top 0.3% of households. Sequestration cuts — the automatic spending cuts that members of both parties hated and the President said would not occur — have been postponed for two months, with three-quarters of FFY 2013 cuts ($85.6 billion) and $109 billion in annual cuts after that still in law through 2022. The President’s line in the sand on raising tax rates for the top 2% of earners got pushed way back, with top rates kicking in at $400,000 for an individual and $450,000 for a couple. A low-wage earner might need 20 years to make that much.

The agreement is at the same time extraordinary. Eighty-five Republican members of Congress voted with their Democratic counterparts to raise taxes on wealthy Americans — no small feat in a Congress defined (some might say dominated) by its Tea Party members, Grover Norquist, and fealty to the no-tax pledge. Even toward the end, the House of Representatives stood firm in its defense of tax cuts, failing to muster enough votes for Speaker John Boehner’s “Plan B,” which included significant spending cuts and limited tax hikes to millionaires and billionaires.

On the plus side, the agreement abandoned the plan for “chained CPI,” a new measure of inflation that would have reduced future cost-of-living increases for Social Security, veterans’ benefits and other critical benefits. There were no additional spending cuts. The family tax credit programs — including the Earned Income Tax Credit and Child Tax Credit — were protected, and improvements made to those credits were extended for five years. Emergency unemployment insurance benefits were extended for laid-off workers who would have faced a significant immediate threat if we went over the cliff.

So what happened? The framework for the debate has always been the same: a grand bargain that would achieve a deficit reduction target of $4 trillion through a combination of cuts and new revenue. 

The President took what could be considered a realistic path — pressing for tax cuts for the middle class and tax hikes for the top 2% who could most afford it (and have done the best over the past decade). He largely succeeded, and while that is a significant victory, it does not raise enough revenue to stabilize the nation’s debt. This will end up putting significant pressure on the spending side of the ledger.

Already much of the press on the agreement is calling for significant new cuts, without acknowledging the $1 trillion in cuts already agreed to in the Budget Control Act of 2011. Plus, the President has lost the leverage of the Fiscal Cliff deadline.

The next fight will take place over the next two months when Congress will have to act to raise the debt ceiling, probably in February. Sequestration cuts will be announced on March 1 and scheduled to begin on March 27, the date that the continuing resolution governing current year spending expires. 

The President acknowledged that the debate is not over in his January 2 press conference and made two strong statements; that the vote on the debt ceiling should not be tangled up in the larger deficit reduction plan, and that new spending cuts have to be matched one for one with new revenue. Still, few are optimistic that Congress will take a reasoned, balanced approach to resolve the remaining issues, as The New York Times notes:

In the weeks to come, Republicans will use not just the debt-ceiling threat, but also the $100 billion across-the-board cuts known as the sequester, delayed for two months in this week’s deal, and the potential shutdown of the government when the current spending resolution expires in March. Standing up to brinkmanship will require a level of resolve that the president has yet to fully demonstrate.

It is also unclear where new revenue will come from given the long-term agreement on the Bush tax cuts and the fact that the President has taken corporate tax reform off the table, arguing that loophole closures should be dedicated to corporate tax reduction. The easiest and most politically popular option, higher marginal tax rates on wealthy individuals, is done. The other options (capping the value of tax deductions for home sales or charitable contributions) will be harder to accomplish.  

So what’s at stake moving forward?

Sequestration cuts. The current plan locks in three-fourths of the cuts ($85.4 billion) plus another $4 billion in discretionary cuts in the current year (FFY2013). While there is some hope current year cuts will be reduced, it is more likely that the debate will center on knocking back the devastating sequestration cuts for 2014 and beyond.

Working family tax credits. One of the surprises of the debate was the targeting of the Child Tax Credit and Earned Income Tax Credit programs, which are refundable for very low-income working families. While the fiscal cliff agreement continues those programs for five years, including the improvements that specifically benefit low-income families, there is grave concern that their refundability may be in jeopardy.

Medicaid. The health care program was excluded from sequestration, but cuts are likely to be on the table. Since states jointly fund this program, reduced federal participation will just shift costs to states. On the plus side, Medicaid is key to the promise of coverage under the Affordable Care Act, so protecting Medicaid is likely to be a high priority for the administration.

Entitlements. Chained CPI might return, as well as cuts to Medicare and Social Security. 

Pressing for additional revenue will continue to be the key to avoiding new deep cuts to health care, education and other critical services. While the Fiscal Cliff no longer looms, the Debt Ceiling Cliff is just over the horizon.

By Sharon Ward, Third and State

The Pennsylvania Budget and Policy Center is out today with a new analysis finding that President Obama’s plan to end federal tax cuts for high-income earners would have very little impact on taxpayers in most Pennsylvania counties.

In over half of the state’s 67 counties, fewer than 1 in 100 residents (that’s 1%) would pay the higher marginal tax rate on income above $200,000 for individuals and $250,000 for married couples.

In most counties, only a small number of individuals are affected. In 24 counties, fewer than 200 high-income earners would pay the higher rate. Almost two-thirds of the top earners who would be impacted reside in just six Pennsylvania counties.

Under President Obama’s plan, families earning over $250,000 would keep other tax breaks on the first $250,000 of income, including a lower bottom tax rate and preferential tax rates on capital gains and dividends — a savings of $12,112 per taxpayer. The top tax rates would be restored to those in effect in the 1990s when the nation added 23 million jobs.

The PBPC county estimates are based on 2010 taxable income data published by the Pennsylvania Department of Revenue. You can read more about the estimates and analysis here.

A blog post by Mark Price, originally published at Third and State.

Paul Krugman this morning caps off a series of blog posts over the last week with a column comparing government spending in the recovery following the deep 1981 recession and government spending in the recovery following the 2007 recession. The bottom line: the employment situation now would have been much better if the federal government had done more to provide aid to state and local governments.

• Paul Krugman, The New York Times — States of Depression:

One way to dramatize just how severe our de facto austerity has been is to compare government employment and spending during the Obama-era economic expansion, which began in June 2009, with their tracks during the Reagan-era expansion, which began in November 1982.

Start with government employment (which is mainly at the state and local level, with about half the jobs in education). By this stage in the Reagan recovery, government employment had risen by 3.1 percent; this time around, it’s down by 2.7 percent.

Next, look at government purchases of goods and services (as distinct from transfers to individuals, like unemployment benefits). Adjusted for inflation, by this stage of the Reagan recovery, such purchases had risen by 11.6 percent; this time, they’re down by 2.6 percent.

And the gap persists even when you do include transfers, some of which have stayed high precisely because unemployment is still so high. Adjusted for inflation, Reagan-era spending rose 10.2 percent in the first 10 quarters of recovery, Obama-era spending only 2.6 percent.

Why did government spending rise so much under Reagan, with his small-government rhetoric, while shrinking under the president so many Republicans insist is a secret socialist? In Reagan’s case, it’s partly about the arms race, but mainly about state and local governments doing what they are supposed to do: educate a growing population of children, invest in infrastructure for a growing economy.

Economist Emmanuel Saez has updated his time series (PDF) on top incomes with new data for 2010, which has just been released by the IRS. Mike Konczal walks you through the new data. The most shocking figure in the new data is the following from Saez:

The top 1% captured 93% of the income gains in the first year of recovery.

The Delaware County Daily Times this morning explores the impact of the end of Pennsylvania’s adultBasic program a little over a year ago.

• Patti Mengers, Delaware County Times — Ex-adultBasic customers still searching for insurance:

One year after 42,000 working Pennsylvanians lost adultBasic, a state program designed to provide low-cost health insurance for low-income residents ages 19 through 64, many are still struggling to get health care, according to health care access advocates.

“Unfortunately I have heard countless stories over the last year from people across the state unable to gain access to the care they need. It’s been especially troubling for people with chronic conditions,” said Athena Ford, spokesperson for the Pennsylvania Health Access Network.

More than 1,700 Delaware County residents relied on adultBasic before the program ran out of money Feb. 28, 2011 and more than 17,400 Delaware County residents were on the waiting list for the low-cost health insurance.

The figure above comes from a new report by John Schmitt, Health-insurance Coverage for Low-wage Workers, 1979-2010 and Beyond (PDF):

The last three decades have seen substantial erosion in employer-provided coverage across workers at all pay levels. Low-wage workers saw the biggest decline in own-employer coverage – about 17.0 percentage points between 1979 and 2010. But, coverage losses were almost as large for workers in the second quintile (down 13.8 percentage points) and the top quintile (down 13.3 percentage points).

A blog post by Mark Price, originally published at Third and State.

What a difference an election year makes. Last year was full of pointless brinksmanship over federal policy issues that will take several decades to solve. Those battles at times looked like they threatened the near term health of the economy.

The New Year is shaping up to be very different. The New York Times reports this morning that a deal has been struck to extend the payroll tax reduction and extended unemployment benefits through the end of the year. Tentatively, it looks as if efforts to weaken the unemployment insurance system have been blocked. Both the payroll tax reduction and extended unemployment benefits were set to expire at the end of February, and the failure to extend them was on most economists’ lists of things that could weaken the economy in 2012.

• Jennifer Steinhauer, The New York Times — Tentative Deal Reached to Preserve Cut in Payroll Tax

The Allentown Morning Call reports that an effort to weaken Pennsylvania’s prevailing wage law appears to have stalled. There is little evidence that the presence or absence of prevailing wage laws raise public construction costs. There is, however, abundant evidence that repeal of these laws lowers the wages of construction workers. Read more here.

So why the effort to weaken the law? It is about catering to owners and executives of contractors who pad their pockets by paying workers’ poorly.

• John Micek, Allentown Morning Call — Prevailing Wage Bill Collapses In The House: Republicans Can’t Muster Votes

Governor Tom Corbett, meanwhile, is touring the state to promote his 2012-13 budget.

• Kathy Boccella, The Philadelphia Inquirer — Corbett defends cuts in Pa. higher-education budget

Corbett insisted to reporters during his tour of the high-tech Siemens Medical Solutions plant that his 2012-13 plan for a steep new cuts in state aid to higher education — including 30 percent less money to state-backed schools such as Pennsylvania State and Temple Universities — could be dealt with by reducing campus operating costs, not by raising tuition…

“A lot of people are upset at spending at that level, but that’s all the money that we have,” he said, reiterating his vow not to raise taxes…

He argued that the state had to be run more like a private business — like Siemens, in fact — to create more jobs and cut costs.

“We can’t continue to raise our prices,” he said, referring to college costs. “If Siemens kept increasing prices, they would make themselves uncompetitive.”

Speaking of “all the money that we have” and running the government like a “private business” that gives away its services for free even when it has no idea whether the benefits of that policy exceed the costs … Governor Corbett has signed into law an extension of Keystone Opportunity Zones.

• Kent Jackson, Scranton Times-Tribune — Governor approves KOZ extension

Gov. Tom Corbett on Monday signed a bill extending for 13 years the Keystone Opportunity Zones program that exempts businesses from paying many state and local taxes.

Exemptions run for up to 10 years, but the bill lets companies enroll through the end of 2015 so the program now will run through 2025…

While KOZs started in 1999 to promote the use of distressed lands and run-down properties, lawmakers and observers noted instances in the early years of the program where companies enjoyed the tax benefits without investing in properties or creating jobs.

Finally this morning, we have lots of news on the impact of economic austerity around the state. For starters, school districts in Cumberland County are moving to balance their budgets by raising fees, and the Lancaster School District faces a budget shortfall.

• Roger Quigley, The Patriot-News — Mechanicsburg schools enact fees for extracurricular activities
• Ed Komenda, The Patriot-News — Cumberland Valley School District considers making students pay to play sports
• Brian Wallace, Intelligencer Journal/Lancaster New Era — School District of Lancaster faces up to $6M in cuts

The Philadelphia City Controller has issued a grim warning about the Philadelphia School District’s financial future.

• Martha Woodall, The Philadelphia Inquirer — Butkovitz report warns of schools’ funding problems:

As expected, City Controller Alan Butkovitz included a warning Tuesday about the Philadelphia School District’s finances in a report that could result in higher borrowing costs for the district.

The comprehensive annual report, sent to bond-rating agencies and bondholders, includes a paragraph expressing reservations about the district’s financial viability.

The school district, the controller’s office said, “has experienced continued operating funds losses, is projecting significant budget shortfalls for fiscal years 2012 and 2013, and is uncertain about its ability to achieve cost savings and obtain additional funding to overcome these budget shortfalls. These conditions raise substantial doubt about its ability to continue as a going concern.”

And social service agencies in Northeastern Pennsylvania are bracing for cuts.

• David Singleton, Scranton Times-Tribune — Agencies stewing over budget cuts:

The week that area social services agencies have had to chew on the cuts in Gov. Tom Corbett’s proposed 2012-13 budget has not made them any easier to swallow.

Amid still-unanswered questions over how a 20 percent smaller pool of funding within a revamped Human Services Development Fund will be distributed at the local level, critics say the one certainty is children and people with disabilities will be among those bearing the brunt of the cuts.

“It’s going to take through the year to find out who really are going to be the victims here,” Michael Hanley, executive director of United Neighborhood Centers of Northeastern Pennsylvania, said Tuesday. “Certainly, what we do know is it is going to be the most vulnerable. That is a given.”

Third and State celebrated its one-year anniversary this week. We launched on February 1, 2011, and 350 posts later we’re still going strong.

We couldn’t do it without our readers, so we thought it would be fun to take a look back at what posts you liked the most. And so we bring you a countdown of the top 10 most viewed blog posts at Third and State.

10. Governor Corbett Unveils 2011-12 Budget Proposal, March 9, 2011:

By taking direct aim at schools and higher education, the Governor’s plan disregards a fundamental principle of economic growth — businesses locate and expand in states with an educated workforce and academic centers of innovation.

There is a better choice. Lawmakers can choose to take a more balanced approach that makes targeted cuts, improves accountability and raises revenue.

9. 2011-12 State Budget Highlights, June 28, 2011:

State legislative leaders and Governor Tom Corbett agreed on a 2011-12 state budget deal this week, and on Tuesday, the state Senate approved it on a 30-20 party-line vote. The bill heads to the House of Representatives next. …

The biggest cuts, in both dollars and percentages, are in education programs, including PreK-12 and higher education.

8. Marcellus Shale, Unemployment and Industrial Diversity, August 3, 2011:

There is always a danger that Marcellus Shale extraction may crowd out rather than seed new industries. Policymakers in Harrisburg and elected officials in these regions should make efforts to ensure that some of the good economic fortune represented by Marcellus Shale gas is reinvested in the seed corn necessary to increase the economic diversity of these communities. A drilling tax is the most sensible way to generate the funds needed to pay for these investments.

7. What is Pat Toomey Doing? Inequality and America’s Future, November 16, 2011:

On a day when a national newspaper is using Philadelphia to illustrate the erosion of the middle class, why is Senator Toomey championing ideas that threaten the most cherished American values (opportunity, democracy) and the country’s future living standards? You’d have to ask him.

6. CEO Pay Soars While Workers’ Pay Stalls, April 6, 2011:

Since there’s been a lot of discussion about public-sector pay recently, it’s interesting to compare these CEO salaries with that of the top-earning public workers in Pennsylvania. According to a Pittsburgh Post-Gazette story in 2009, the top 100 highest-paid state employees in Pennsylvania earned $19.4 million as a group. In other words, the two highest-paid CEOs in Pennsylvania earn a lot more than the top 100 public-sector workers.

5. Fruit Salad, Anyone?, March 14, 2011:

The Governor’s speechwriter appears to love apples to pears comparisons, or maybe bananas to oranges. But nothing so plain as apples to apples. …

In sum, when you do apples-to-apples comparisons, public-sector workers do not earn more than comparable private-sector ones. In addition, Pennsylvania public-sector wages have not risen faster than in the private sector over the last half decade.

4. A $56 million ‘Oops’: PA Revenue Department Updates Marcellus Shale Tax Estimates, November 23, 2011:

Back in May, the Department estimated that taxable Marcellus Shale royalties generated $102.7 million in PIT collections in 2010. Now the Department says that figure is a tad lower — $46.2 million, a decrease of $56.5 million or over 55% from what was reported six months ago. To quote Britney Spears, “Oops!” …

The gas industry has been very effective in arguing that it is contributing a “game-changing” number of new jobs and tax revenue, and uses these claims to beat back efforts to enact a meaningful drilling tax. We have made the case for some time that these claims are well overstated. The Department of Revenue data, particularly the paltry PIT numbers for 2010, seem to back up our case.

3. Déjà vu All Over Again: Mid-year Cuts and a Budget Shortfall on Tap for 2012, December 20, 2011:

Secretary Zogby rightly identified areas of built-in growth that will contribute to a structural budget deficit moving forward.

His analysis failed to mention how much tax cuts, both enacted and planned, will contribute to the short- and long-term problem. For example, the administration has likely under-estimated the cost of the 100% bonus depreciation policy enacted in January, contributing to the lower-than-expected corporate tax collections. (This policy allowed corporate taxpayers in 2011 to deduct 100% of a capital expense up front, instead of stretching it out over a period of years.)

The Governor’s budget guidance issued earlier this year called for $400 million more in tax cuts, which could contribute to more than half of the expected gap for 2012-13.

2. What’s Good for the U.S. Chamber of Commerce Isn’t So Good For You, March 3, 2011:

All else equal, the Chamber seems to prefer that any given level of job growth go along with lower wages and less human development. This leads you to conclude that the Chamber values lower wages and less human development as simply good things in and of themselves. Kind of like apple pie. Go figure.

And the number 1 top viewed blog post of the year:

Teacher Salaries and the Medieval Bloodletting of the Public Schools, May 23, 2011:

The Teacher Salary Project seeks to educate Americans that this country has relatively low teacher pay compared to the most successful educational systems in the world. That’s one reason it’s difficult for American schools to retain their most talented teachers, especially in distressed communities. …

Yet policymakers in Pennsylvania are running hard in the opposite direction. Cuts in public school funding will mean stagnant or lower pay, especially in our poorest districts. More education delivered in charter schools and private schools will mean greater inequality in pay in two senses: a bigger gap, on average, between the charter and private schools serving affluent students and those serving lower-income children; and a bigger gap, again on average, between the pay of school CEOs and principals and the pay of front-line teachers.

When public school performance predictably suffers, any chance this will be used to push privatization of education further? Heh, when the first round of medieval bloodletting doesn’t work, let’s bleed the patient a bit more.

Oil Ram (photo: kqedquest, flickr)

A blog post by Mark Price, originally published at Third and State.

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. Read the rest of this entry →

A blog post by Mark Price, originally published at Third and State.

In the State of the Union address last week, President Obama called for more investment in programs that link training in higher education to employers. This morning the Harrisburg Patriot-News has an excellent article detailing one such program here in Central Pennsylvania.

• Diana Fishlock, Patriot-News — ArcelorMittal and United Steelworkers Local 1688 program offers Penn State students training in manufacturing:

ArcelorMittal and United Steelworkers Local 1688 are teaming up with Penn State Harrisburg and Penn State York, where [York County student Ryan] MacDonald studies, to launch Steelworker for the Future in Central Pennsylvania, a training program to prepare students for careers in the manufacturing industry. Most of the classes will be at Penn State York.

ArcelorMittal is the world’s largest steel company, with 18,000 U.S. employees and 280,000 worldwide in 20 countries.

Many of the employees at ArcelorMittal Steelton have worked there for decades. As they retire and the plant upgrades, the company needs skilled workers who understand new technologies, said Ray Napoli, president of United Steelworkers Local 1688.

ArcelorMittal broke ground in Steelton in December for a $54 million high-efficiency reheat furnace project that it hopes to use this year, spokeswoman Mary Beth Holdford said.

Last week the Bureau of Economic Analysis released a new round of detailed data on economic growth. Paul Krugman riffs off Jared Bernstein to point out that cuts in state and local spending are focused on two areas, physical and human capital.

That is, we’re sacrificing the future as well as the present. Oh, and the cuts that aren’t falling on investment in physical capital are largely falling on human capital, that is, education.

It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.

What an utter disaster.

(photo: cobalt, flickr)

A blog post by Mark Price, originally published at Third and State.

Today is Earned Income Tax Credit (EITC) awareness day!

EITC, the Earned Income Tax Credit, sometimes called EIC is a tax credit to help you keep more of what you earned. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

Since we are on the topic of the EITC, today is a good day to highlight a proposal to strengthen both the minimum wage and the earned income tax credit so that they are more effective tools for reducing poverty.

• Jeannette Wicks-Lim & Jeffrey Thompson, Political Economy Research Institute – Combining Minimum Wage and Earned Income Tax Credit Policies to Guarantee a Decent Living Standard to All U.S. Workers:

..we begin by proposing a 70 percent increase in current minimum wage rates. This would raise the federal minimum from today’s rate of $7.25 to $12.30 per hour.

We also propose two expansions of the EITC, the federal program that provides tax relief and cash benefits for low-income working families. These include raising the maximum EITC benefits by 80 percent and the income eligibility threshold to three times the federal poverty line. The maximum EITC benefit would rise from $5,028 to $9,040 and households with incomes up to $57,000 could receive some benefit.

In combination, these two policy measures would guarantee 60 percent of all low-income working families a decent living standard through full-time employment. The other 40 percent of low-income working families offer more difficult challenges, because they either live in high-cost areas or they depend on only one wage-earner to raise children. But our proposed measures would substantially improve conditions for these households as well. Current policy terms guarantee a decent living standard for only 12 percent of low-income working families. Read the rest of this entry →

A blog post by Mark Price, originally published at Third and State.

The Pittsburgh Post-Gazette has a pretty good summary of the State of the Union.

Here is the full text of the President’s speech, and Wonkblog has a version of the speech with only what they define as specific policy proposals.

What follows are our favorites from the speech.

Community colleges and workforce development:

Join me in a national commitment to train two million Americans with skills that will lead directly to a job. My Administration has already lined up more companies that want to help. Model partnerships between businesses like Siemens and community colleges in places like Charlotte, Orlando, and Louisville are up and running. Now you need to give more community colleges the resources they need to become community career centers – places that teach people skills that local businesses are looking for right now, from data management to high-tech manufacturing.

I want to cut through the maze of confusing training programs, so that from now on, people like Jackie have one program, one website, and one place to go for all the information and help they need. It’s time to turn our unemployment system into a reemployment system that puts people to work.

Taxes:

But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes.

Infrastructure:

Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure. So much of America needs to be rebuilt. We’ve got crumbling roads and bridges. A power grid that wastes too much energy. An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.

During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, we connected our States with a system of highways. Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today.

In the next few weeks, I will sign an Executive Order clearing away the red tape that slows down too many construction projects. But you need to fund these projects. Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.

A blog post by Mark Price, originally published at Third and State.

Tonight President Obama will deliver his State of the Union Address to Congress. We are expecting the President to recommend an extension through the end of 2012 of extended unemployment insurance benefits and the payroll tax credit. It looks as though a major theme in the address — besides the catch phrase “built to last” — will be conventional policies aimed at reducing inequality, such as increased spending/tax credits for education and training.

Education and training are important and fruitful means of reducing inequality, but they fall well short of what’s needed to reduce the degree of inequality we now face.  A more forceful step in the direction of reducing inequality would include raising the minimum wage and making it easier for workers to form and join unions. We don’t expect to hear the President call for either of those changes.

The President will propose paying for his new initiatives with higher taxes on wealthy households. As with education and training, restoring some sense of fairness to the tax code is a laudable goal but longer-lasting reductions in inequality will only come from policies that allow the pre-tax wages of more Americans to rise as the size and wealth of our economy grows.

• Tracie Mauriello, Pittsburgh Post-Gazette — Obama to target economy in State of the Union address tonight:

Manufacturing, energy, job training and middle-class growth will be the cornerstones of President Barack Obama’s speech tonight as he takes to the nation’s grandest political stage for the annual address on the state of the union, according to senior advisers.

We are slowly getting details of a settlement of allegations of fraud by banks during the housing bubble. Dean Baker notes this morning that the deal is said to include immunity from prosecution for banking executives in exchange for mortgage relief paid for by investors (not the banks). It’s good to be a banker.

The Philadelphia Inquirer reports this morning that the association that represents construction contractors who mainly compete for work in the non-residential construction sector is expecting essentially no change in the number of workers they will employ in 2012. Non-residential construction makes up roughly two-thirds of all construction employment in Pennsylvania. Also of note in the article: 62% of Pennsylvania contractors surveyed reported relying on some stimulus-related work. Remember that factoid next time you hear someone claim stimulus spending had no effect on the economy.

• Jane M. Von Bergen, The Philadelphia Inquirer — Construction industry expects more jobs, but only a few:

Construction employment will go up — very slightly — in 2012, contractors predicted in a survey released Monday by the Associated General Contractors of America…

The survey notes that many contractors relied on stimulus-funding projects over the past years, but few expect to perform much stimulus-funded work in 2012.

In Pennsylvania, for example, 62 percent of those surveyed had stimulus work, with most of them assigning the majority of their workers to those projects. But in 2012, only one in five expects stimulus work.

More news of property tax hikes, teacher layoffs and larger class sizes — this time out of Dauphin County.

• Marijon Shearer, Patriot-News — Central Dauphin School Board approves a $155.4 million preliminary budget for 2012-13:

The Central Dauphin School Board Monday night approved a $155.4 million preliminary budget for 2012-13 that could mean higher taxes, larger class sizes or furloughs of as many as 50 district employees.

The Patriot-News Editorial Board notes that the asset tests for food stamps proposed by the Corbett administration are unwise and likely to punish many rural families.

• Patriot-News Editorial Board — This test is no asset: Planned changes in food stamp eligibility penalize people struggling financially:

Creating an asset test for food stamps in Pennsylvania is the wrong approach…

Given the economic woes many families are facing with at least one parent — sometimes both — out of a job, the car rule hardly makes sense. This is especially true in rural parts of the state. Reliable transportation is critical to achieving financial independence, and in many families that means parents having two decent cars to drive.

The other issue is the $2,000 limit in savings. Families struggling to get out of poverty are likely to be trying to save money, build up funds to help them pay off bills, make a security deposit on an apartment or catch up on mortgage payments. It makes no sense to compel people to potentially liquidate funds to be able to put food on the table.

Hunger is a problem in our state, and many people rely on food stamps to solve it.