-Caveat Lector- ------- Forwarded Message Follows ------- Date sent: Thu, 30 Sep 1999 10:17:32 -0500 To: [EMAIL PROTECTED] From: "John C. Goodman" <[EMAIL PROTECTED]> Subject: NCPA Policy Digest 9-30-99 National Center For Policy Analysis DAILY POLICY DIGEST Thursday, September 30, 1999 PointCast can automatically load NCPA's Policy Digest summaries on your desktop for easy reading. For information go to http://www.ncpa.org/pointcast.html * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * WE’VE GOT THE BODY BUT WE NEED YOUR BRAINS! * * * * If you have online marketing management and technical skills, * * we have the place you can use them!!! The NCPA is looking for * * an Online Marketing Manager at the Dallas office. Check out * * the requirements at http://www.ncpa.org/about/onlinemgr2.html * * and if you are interested please email your resume to Drew * * Anderson at [EMAIL PROTECTED] * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * IN TODAY'S DIGEST o A MINIMUM WAGE INCREASE MAY BE TIED TO TAX BREAKS for business, say observers....USA TODAY o REPUBLICANS PLAN TO DELAY EMPLOYMENT TAX CREDITS to keep from spending Social Security funds...NEW YORK TIMES o FANNIE MAE WILL BUY RISKIER LOANS in a plan to increase minority home ownership....NEW YORK TIMES o SOME SCHOOLS ARE TYING TEACHERS' PAY TO STUDENT PERFORMANCE, and at least 10 states may test the idea....USA TODAY o FLORIDA TRANSFERRED 7,000 JUVENILES TO ADULT COURT in 1995, almost as many as all judges nationwide, says a study....JUSTICE POLICY INSTITUTE/USA TODAY o INCOME INEQUALITY IS OVERSTATED, says a new study, because the Census Bureau doesn't adjust figures for household size and other factors....HERITAGE FOUNDATION IN TODAY'S NEWS TAX BREAKS TO CUSHION MINIMUM WAGE HIKE Congressional leaders are clearing the way for passage next month of a bill that would increase the $5.15 an hour minimum wage by at least $1 over the next two to four years, say observers. To make a wage increase less costly to small businesses -- which employ many of the 4.4 million workers that would be affected -- G.O.P. leaders in the House of Representatives plan to pair a wage increase with some business-friendly tax breaks, such as: o Tax credits for hiring entry-level workers. o An increase in the business meal deduction from 50 percent to 80 percent. o A full deduction for health insurance premiums paid by the self-employed. The size of the tax breaks is likely to depend on how much the minimum wage is raised. While Democrats want a $1 boost over two years, a bipartisan House alternative would increase it $1.30 over four years. The estimated cost to employers is up to $3 billion a year. About 3 percent of workers would benefit from the increase. Half of them are under 25, nearly two-thirds are women, and three- fifths work only part time. Congress last raised the minimum in 1996, from $4.25 to $5.15. By contrast, the average hourly wage for all private sector employees is about $13 an hour. When adjusted for inflation, average pay and the minimum wage are worth less than in 1979. Source: Owen Ullmann, "This Time, GOP Likely to Concede on Raising Wages," USA Today, September 30, 1999. For more on Proposed Future Increases http://www.ncpa.org/hotlines/min/proposed.html DELAY POSSIBLE IN EARNED INCOME TAX CREDIT PAYMENTS In order to pay for their spending plans without raiding Social Security, congressional Republicans have devised a plan to delay the refundable Earned Income Tax Credit (EITC) received by millions of working-class families, according to observers. Critics say it would hurt people on the lower rungs of the economic ladder o Congress is scheduled to spend $7.6 billion in surplus contributions to Social Security to run the government in the 2000 fiscal year, which starts Friday. o But because under the new plan about $8 billion won't be spent in FY 2000, Republicans show a $400 million surplus -- not a $7.6 billion hit on Social Security. o According to the Congressional Budget Office, the bill could be much higher: Republicans are actually on course to spend $17.9 billion out of Social Security. Republicans say the only way to avoid raiding Social Security is to distribute the EITC in 12 monthly payments next year rather than the normal lump sum paid to qualifying low-income working families after tax returns are filed. Because the fiscal year ends September 30, the last three payments in 2000 would count against the FY 2001 budget. o About 20 million Americans in households earning from $10,200 to $30,580 are eligible for the EITC. o They received $28.5 billion last year, with the average family receiving $1,890 -- allowing some to pay debts, make a down payment on a car or pay tuition. Critics say that under the plan the same family would receive a monthly check of $157.50, better suited for paying bills. Gene Sperling, director of the White House's National Economic Council, says the plan is "a forced interest-free loan to the government" from "people scraping to get by." Source: Tim Weiner, "G.O.P. Would Delay Poor's Tax Credit," New York Times, September 30, 1999. For NYT text (requires free registration) http://www.nytimes.com/library/politics/093099social-security.html For more on Federal Surplus/Deficit http://www.ncpa.org/pd/budget/budget-4.html FANNIE MAE LOWERS CREDIT REQUIREMENTS Fannie Mae, the nation's biggest underwriter of home mortgages, plans to ease credit requirements on loans it purchases from banks and other lenders. The goal is to encourage banks to make home loans to people whose credit isn't good enough to get conventional loans and is expected to increase minority home ownership. However, the plan significantly increases the risk Fannie Mae might run into trouble in an economic downturn. "If they fail," says Peter Wallison of the American Enterprise Institute, "the government will have to step up and bail them out" the way it bailed out the savings and loan industry. Fannie Mae has been under pressure from the White House and banks, thrifts and mortgage companies to help them make loans to so-called subprime borrowers. While Fannie Mae does not lend money directly to consumers, it buys loans banks make in what's called the secondary market. By expanding what loans it will buy Fannie Mae hopes to convince banks to make more loans to those with lower credit ratings. Subprime borrowers must pay three or four percentage points higher than conventional loans because of their shaky credit history and savings. And at least one study reports 18 percent of subprime loans went to black borrowers, compared to five percent of conventional loans. However, minority home ownership has exploded, according to Harvard University's Joint Center for Housing Studies. o From 1993 to 1998, the number of mortgages extended to Hispanics jumped by 87.2 percent. o During the same period, the number of blacks who got mortgages increased by 71.90 percent and for Asian- Americans, it increased by 46.3 percent. o Last year, 44 percent of the loans Fannie Mae purchased were from these groups. Source: Steven A. Holmes, "Fannie Mae Eases Credit To Aid Mortgage Lending," New York Times, September 30, 1999. For more on Financial Institutions http://www.ncpa.org/pd/regulat/reg-5.html SUMMIT TO APPROVE TEACHER "PAY FOR PERFORMANCE" "Pay for performance," which ties teachers' salaries to student achievement, is expected to be debated at the National Education Summit. A performance pay plan is expected to be approved by educators, business leaders and governors at the two-day summit, which starts today. o At least 10 states will test the program, although the specific states have not yet been identified. o Denver schools already are involved in a two-year experiment involving 10 percent of the district's teachers -- becoming the first district in the U.S. to adopt such a plan. o Columbus, Ohio, allows teachers to make up to an additional $500 a year if their schools meet certain goals. o And Minneapolis teachers agreed to a contract that ties pay to performance. "There are 10 to 12 different places around the country where some form of this is going on," says Bob Chase, president of the National Education Association. Source: Tamara Henry, "States to Tie Teacher Pay to Results," USA Today, September 30, 1999. For text http://www.usatoday.com/news/ndswed08.htm For more on Teacher Performance http://www.ncpa.org/pi/edu/edu7.html#d FEDERAL "PROSECUTORIAL DISCRETION" TO TRY JUVENILES AS ADULTS Federal law calls for judges to decide whether a juvenile should be treated as an adult in federal court. But if a provision in the juvenile crime bill awaiting action in Congress passes, the prosecutorial discretion allowed to district attorneys in 14 states and the District of Columbia would also be given to federal prosecutors. In Florida, the first state to give prosecutors that power in 1981, a report from the Justice Policy Institute found that: o Florida prosecutors referred some 7,000 juveniles to adult court in 1995, nearly as many as the 9,700 juveniles nationwide that judges ordered to be treated as adults. o Most of the juveniles were charged with nonviolent offense, and only 29 percent were charged with violent crimes. o Youths tried as adults were more likely to commit another crime than those sent to the juvenile system, and to do so twice as fast after their release as those handled in the juvenile system. However, Stu VanMeveren, president of the National District Attorneys Association, says that in most states the juveniles diverted to adult court are repeat offenders or are charged with violent crimes. "In past years, we'd see 16-or 17-year-olds committing crimes that 13- and 14-year-olds are committing now." Source: Gary Fields, "Report Critical of Prosecutors' Power over Youths," USA Today, September 30, 1999; Vincent Schiraldi and Jason Ziedenberg, "The Florida Experiment: An Analysis of the Impact of Granting Prosecutors Discretion to Try Juveniles as Adults," September 1999, Justice Policy Institute, Center on Juvenile and Criminal Justice, 2208 Martin Luther King Jr. Avenue, S.E., Washington, D.C. 20020, (202) 678-9282. For USA Today text http://www.usatoday.com/news/ndswed07.htm For JPI study http://www.cjcj.org/jpi/prosecutor.html For more on Juvenile Crime http://www.ncpa.org/hotlines/juvcrm/hotline.html IN OTHER NEWS HOW THE CENSUS BUREAU OVERSTATES INCOME INEQUALITY Widely used figures from the U.S. Bureau of the Census are misleading, according to a study from the Heritage Foundation's Center for Data Analysis. Researchers analyzed the Census Bureau's figures on the distribution of income and found that they overstate the degree of inequality and obscure important factors that determine it. The trouble begins when, in order to measure income distribution, the Census Bureau ranks households from highest to lowest incomes, divides them into five quintiles, and determines the share of total income received by each quintile. Since the quintiles are based on households, they do not contain equal fifths of the U.S. population, and are in fact unequal in size. For instance: o The top Census "quintile" contains not 20 percent of the population but 24.3 percent, while the bottom quintile contains only 14.8 percent of the population. (see figure http://www.heritage.org/library/cda/graphics/cda99-07cht7.gif ). o This is due to differences in household size -- for instance, 54.9 percent of the households in the bottom quintile consist of just one person, compared with only 7 percent of households in the top quintile. o In addition to size, the households differ in other important respects -- for instance, more than twice as many people in the Census' top quintile are of working age, compared to the lowest quintile (see figure http://www.heritage.org/library/cda/graphics/cda99-07cht8.gif ). When the figures are adjusted to include a broader measure of income, and the income distribution is divided so that each quintile contains equal numbers of people, the share of income received by the bottom quintile is nearly three times higher than Census reports (see figure http://www.heritage.org/library/cda/graphics/cda99-07cht2.gif ). Furthermore, the relative inequality of the bottom half of the distribution to the top half shrinks substantially: while the Census shows the bottom half receiving roughly $1 of income for every $4 received by the top half, the difference shrinks to $1 for every $2 after the adjustments (see figure http://www.heritage.org/library/cda/graphics/cda99-07cht6.gif ). Source: Robert Rector and Rea Hederman, "Income Inequality: How Census Data Misrepresent Income Distribution," CDA Report No. 99- 07, September 29, 1999, Center for Data Analysis, Heritage Foundation, 214 Massachusetts Avenue, N.E., Washington, D.C. 20002, (202) 546-4400. For text http://www.heritage.org/library/cda/cda99-07.html For more on Inequality and Income Distribution http://www.ncpa.org/pd/economy/econ7.html * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * NATIONAL CENTER FOR POLICY ANALYSIS DALLAS, TEXAS "Making Ideas Change the World" Internet Address: http://www.ncpa.org * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * A<>E<>R ~~~~~~~~~~~~~~~ The only real voyage of discovery consists not in seeking new landscapes but in having new eyes. -Marcel Proust + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your common sense." --Buddha + + + + + + + + + + + + + + + + + + + + + + + + + + + + A merely fallen enemy may rise again, but the reconciled one is truly vanquished. -Johann Christoph Schiller, German Writer (1759-1805) + + + + + + + + + + + + + + + + + + + + + + + + + + + + It is preoccupation with possessions, more than anything else, that prevents us from living freely and nobly. -Bertrand Russell + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Everyone has the right...to seek, receive and impart information and ideas through any media and regardless of frontiers." 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