CRS Reports

Small Business Innovation Research and Small Business Technology Transfer Programs

The Small Business Innovation Research (SBIR) program was established in 1982 by the Small Business Innovation Development Act (P.L. 97-219) to increase the participation of small innovative companies in federally funded R&D. The act requires federal agencies with extramural R&D budgets of $100 million or more to set aside a portion of these funds to finance an agency-run SBIR program. As of 2014, 11 federal agencies operate SBIR programs. A complementary program, the Small Business Technology Transfer (STTR) program, was created by the Small Business Research and Development Enhancement Act of 1992 (P.L. 102-564) to facilitate the commercialization of university and federal R&D by small companies. Agencies with extramural R&D budgets of $1 billion or more are required to set aside a portion of these funds to finance an agency-run STTR program. As of 2014, five federal agencies operate STTR programs. Both the SBIR and STTR programs have three phases. Phase I funds feasibility-related research and development (R&D) related to agency requirements. Phase II supports further R&D efforts initiated in Phase I that meet particular program needs and that exhibit potential for commercial application. Phase III is focused on commercialization of the results of Phase I and Phase II grants, however the SBIR and STTR programs do not provide funding in Phase III. The SBIR and STTR programs have been extended and reauthorized several times since their initial enactments. Most recently, the programs were reauthorized through September 30, 2017 under the SBIR/STTR Reauthorization Act of 2011 which was enacted as Division E of the National Defense Authorization Act for Fiscal Year 2012 (P.L. 112-81). Among its provisions, the act incrementally increases the set-aside for the SBIR effort to 3.2% by FY2017 and beyond; incrementally expands the set-aside for the STTR activity to 0.45% in FY2016 and beyond; increases the amount of Phase I and Phase II awards; allows recipients of a Phase I award from one federal agency to apply for a Phase II award from another agency to pursue the original work; allows the National Institutes of Health, the Department of Energy, and the National Science Foundation to award up to 25% of SBIR funds to small businesses that are majority-owned by venture capital companies, hedge funds, or private equity firms, and allows other agencies to award up to 15% of SBIR funds to such firms; creates commercialization pilot programs; and expands oversight activities, among other things. Through FY2011, federal agencies had made more than 133,000 awards totaling $33.7 billion under the SBIR and STTR programs. In FY2011, agencies awarded $2.224 billion in SBIR funding. The Department of Defense (DOD) and Department of Health and Human Services (HHS) accounted for more than three-fourths of SBIR funding in FY2011. While more than two-thirds of SBIR grants made in FY2011 were Phase I awards, more than three-fourths of SBIR funding went to Phase II awards. In FY2011, agencies awarded $251.2 million in STTR funding. DOD and HHS accounted for nearly four-fifths of STTR funding. Like the SBIR program, most STTR grants (76%) were for Phase I awards, while most funding (76%) went to Phase II awards. In exercising its oversight authorities for the SBIR and STTR programs, Congress has placed a strong emphasis on monitoring the implementation and effects of changes made by the 2011 reauthorization act. In particular, Congress has expressed continuing interest in the participation of majority-owned venture capital firms in the SBIR program, the effectiveness of efforts seeking to improve commercialization outcomes, the share of awards and funding received by women-owned and minority and disadvantaged firms, and the SBA’s agency coordination, policy guidance, data collection, and dissemination responsibilities.

Aug 26, 2014

Agricultural Exports and 2014 Farm Bill Programs: Background and Issues

U.S. agricultural exports have long been a bright spot in the U.S. balance of trade, with exports exceeding imports in every year since 1960. The most recent forecast for FY2014 is that U.S. agricultural exports will reach a record high of $149.5 billion. U.S. agricultural imports are forecast to reach $110.5 billion in FY2014, resulting in a $39 billion agricultural trade surplus, which would rank second only to the FY2011 surplus of $42.9 billion. Exports are a major outlet for many farm commodities, in some cases absorbing over one-half of U.S. output. Among the key variables affecting U.S. agricultural exports are the value of the U.S. dollar vis-a-vis currencies of trading partners and the pace of economic growth, particularly in developing and emerging countries. According to U.S. Department of Agriculture (USDA) forecasters, factors contributing to a promising outlook for U.S. agricultural exports in FY2014 include moderately higher world economic growth in FY2014; a stable and relatively low-valued U.S. dollar; larger U.S. supplies of key grain crops; and diminished competition from some foreign competitors. The United States operates a number of programs aimed at developing overseas markets for U.S. agricultural products and facilitating exports. The 2008 farm bill authorized these trade programs through FY2012, but they were subsequently extended through FY2013 by the “fiscal cliff” legislation (P.L. 112-240). In early 2014, Congress approved the Agricultural Act of 2014, which the President signed into law on February 7, 2014, as P.L. 113-79, extending most programs through FY2018. The trade title (Title III) of the farm bill authorized, amended, and repealed three main types of agricultural export programs: Export market development programs. The Foreign Agricultural Service (FAS) of USDA administers five market development programs that aim to assist U.S. industry efforts to build, maintain, and expand overseas markets for U.S. agricultural products. The five are the Market Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP), the Quality Samples Program (QSP), and the Technical Assistance for Specialty Crops Program (TASC). Export credit guarantee programs. Through the GSM-102 Program and the Facility Guarantee Program, USDA’s Commodity Credit Corporation (CCC) guarantees loans so that private U.S. financial institutions will extend financing to buyers in emerging markets that want to purchase U.S. agricultural products. The 2014 farm bill shortened the loan term on which export credit guarantees would be made available to conform to U.S. commitments in the World Trade Organization (WTO). Direct export subsidy programs. The 2014 farm bill terminated the Dairy Export Incentive Program (DEIP), which had been inactive for several years. The 2014 farm bill broke new ground in directing the Secretary of Agriculture to reorganize the export and import activities of the USDA, while creating a new Under Secretary of Agriculture position with the aim of coordinating the government’s response to trade-related sanitary and phytosanitary issues affecting agricultural products, as well as nontariff trade barriers. Issues for Congress include determining the role and effectiveness of the public vs. private sector for investing in the development of new markets; monitoring the effect of policy changes in the farm bill on the Brazil WTO case against U.S. cotton subsidies and possible implications for trade relations; and overseeing the Secretary’s plans to reorganize USDA’s trade-related functions.

Aug 25, 2014

Overview of the Relationship between Federal Student Aid and Increases in College Prices

College affordability is an issue that has received considerable attention from federal policy makers in recent years as concerns have arisen that a college education may be out of reach for an increasing number of students and families. While there is little disagreement that escalating college prices pose a problem, there is not a consensus about the precise causes for these increases. Among the possible explanations for price increases, one that has surfaced with some frequency in recent years is the notion that the availability of or increases in federal student aid may help to fuel price increases, as institutions seek to capture additional aid rather than stabilize or lower prices. This hypothesized relationship has received a good deal of attention and raised some concerns about the efficacy of federal student aid policies that aim to enhance access and affordability. This report has been undertaken in response to numerous congressional requests to explain what is actually known about the relationship between student aid and prices. In this report, this task is approached first through analysis of trends in prices, examining different measures and concepts of price. This is followed by a brief examination of trends in student aid, and an examination of many of the competing explanations for why prices are increasing. Finally, the report explores what is known about the possible causal relationship between student aid and price increases, principally through a survey of primary studies that attempt to isolate the effects of student aid on college prices. Some of the themes highlighted in the report are as follows: While colleges publish list prices, they also engage in fairly extensive price discounting, effectively reducing prices. Additionally, other subsidies such as governmental grants further defray the price students are asked to pay. Trends in college prices can be measured in terms of published prices, effective prices (prices net of institutional discounts), or net prices (prices net of governmental grant aid and institutional discounts). By any measure, in more recent years for which more comprehensive data are available, prices consistently increased at rates exceeding inflation. Overall, student aid per full time equivalent student has also increased in recent years although the trends in aid exhibit more volatility across years (than do the trends in price), sometimes escalating by large increments and sometimes declining or eroding from year to year. A plethora of potential explanations for escalating college prices exist. These include declining state appropriations on a per student basis and fluctuating endowments, which may lead to greater college reliance on tuition revenue from students. Similarly, the escalating cost of items upon which colleges are highly reliant, such as high-skill labor and technology, are identified as factors that increase the cost of providing education and potentially contribute to higher prices. Other explanations suggest that colleges have multiple institutional missions, have ineffective centralized control of costs, suffer from various types of productivity issues, and have institutional orientations and incentives targeted toward raising and spending considerable amounts to enhance students’ experiences as opposed to orientations toward using resources efficiently. In addition, it is often suggested that durable, or relatively inelastic, demand for postsecondary education may endow colleges as credentialing institutions with considerable pricing power (i.e., the ability to raise prices without destabilizing demand). There are a substantial number of seemingly plausible explanations for why prices are increasing. This makes it challenging to isolate the effects of any single factor. Through CRS’s review of research nine empirical studies have been identified, which over the last decade or so have attempted to isolate the effects of changes in aid on prices. Collectively, the studies focus on price responses associated with several different types of student aid, but the effects of grant aid on prices is the most heavily studied relationship. The relationship between prices and loans or tax assistance—the types of student aid that are most widely available and are available to students and families across higher income categories—is not the focus of much of this research. Concerns that colleges may “capture” some portion of the aid that is provided to students to lower their net price are generally not directly addressed in the studies. The studies are primarily focused on broad institutional price responses. That is, they do not typically address effects on prices for subgroups of students within institutions, and distinctions are not made between those students who are and are not receiving the student aid hypothesized to be affecting prices. Hence, questions about the extent to which aid policies aiming to lower the net price for targeted students actually do so are generally not directly addressed. The studies vary across many dimensions, including the main research questions explored, theorized mechanisms of causation (i.e., how they theorize aid would be captured by institutions), the analytical/methodological approaches employed to examine causality (e.g., natural or quasi experimental versus regression based approaches), selection and use of data, construction and use of proxy measures for aid and price, model specification, and universe of colleges and universities studied. This expansive set of differences makes it especially hard to compare and contrast the studies. There is not a high degree of consensus in the findings generated across the studies. Findings across studies are not consistent in terms of direction and magnitude of effects, and even within studies, changes in model specification or controls lead to vastly different results, often without strong rationales for the superiority of specifications generating more robust findings. Beyond the various differences in these studies and methodological challenges encountered across this research agenda, not having the outcome measure of primary interest available—a good measure of net price—is ultimately a substantial limiting factor in understanding the relationship between aid and price. Rather, the studies rely heavily on measuring change in list price or change in proxies for net price. This raises the fundamental question of whether, across the studies, the outcome variables actually measure change in the outcome of interest and suggests the need to develop more precise data on net price at institutions to further the understanding of the relationship between federal aid and college prices.

Aug 22, 2014

Key Historical Court Decisions Shaping EPA’s Program Under the Clean Air Act

This report provides a selective overview of court decisions that historically have most shaped EPA’s program under the Clean Air Act (CAA). Court decisions described in the report deal with the following: National ambient air quality standards (NAAQSs), holding that in setting the standards EPA is not to consider economic and technological feasibility. State implementation plans for achieving NAAQSs, holding that EPA also may not consider economic and technological feasibility in approving or disapproving such plans, or the fact that the state plan is more stringent than necessary, or does not require an EPA-preferred control method. Interstate air pollution, holding that EPA may consider costs in applying the CAA “good neighbor” provision, but any emissions trading program must assure some emission reduction in each upwind state. Nor does the CAA require that states be given a second opportunity to file an implementation plan after EPA has quantified the state emissions budget; EPA may promulgate its own plan for the state immediately. New source performance standards (NSPSs), holding that while the Act requires them to be based on “adequately demonstrated” technology, that does not imply that any existing source of the type proposed for a NSPS is able to meet the NSPS. New source review in areas cleaner than NAAQSs, holding that EPA may override a state’s determination of the “best available control technology” required for new stationary sources. New source review may be required for greenhouse gas emitters only if the new source will emit conventional pollutants in threshold amounts. The “routine maintenance” exemption from NSPSs and new source review, created by EPA and accepted by the courts despite statutory silence. Courts hold that whether the exemption applies depends on the increase in a plant’s expected life due to the project, and the project’s cost, nature, and magnitude. Expansive interpretation of the exemption has been judicially rejected. The “bubble concept,” an EPA approach that looks at net changes in the emissions of a pollutant from a facility, holding that its permissibility depends on statutory context. National standards for hazardous air pollutants, holding that EPA may determine if a facility triggers the Act’s “maximum achievable control technology” requirement for such pollutants by aggregating emission sources in a contiguous plant under common control, not just sources within the same source category. Also, EPA is not limited in setting emission standards to hazardous air pollutants currently controlled with technology. Greenhouse gas emissions, holding that the CAA generally covers them, and that EPA cannot elect not to exercise that authority based on policy concerns. See, however, “new source review” above. Enforcement, holding that the recipient of an administrative compliance order must be allowed to seek pre-enforcement review of the order in court.

Aug 22, 2014

Social Security Disability Insurance (DI) Trust Fund: Background and Solvency Issues

Aug 21, 2014

Lighting Industry Trends

More than 4 billion incandescent light bulbs (sometimes referred to as “lamps”) are in use in the United States. The basic technology in these bulbs has not changed substantially in the past 125 years, despite the fact that they convert less than 10% of their energy input into light. Improving light bulb performance can reduce overall U.S. energy use. About 20% of electricity consumed in the United States is used for lighting homes, offices, stores, factories, and outdoor spaces. Lighting represents about 14% of residential electricity use. The Energy Independence and Security Act of 2007 (EISA, P.L. 110-140) imposed higher efficiency standards for manufacturers and importers of general use, screw-base light bulbs commonly used in residential fixtures, that began January 1, 2012. EISA did not ban incandescent light bulbs. Instead, the law mandated that bulbs manufactured or imported after phase-in dates specified in the bill meet higher efficiency standards—about 25%-30% more efficient on average. The law allows industry to determine which products best meet those requirements. On December 23, 2011, President Barack H. Obama signed the Consolidated Appropriations Act, 2012 (P.L. 112-74). Title III of the law provided FY2012 appropriations for the Department of Energy (DOE), including language barring use of any DOE funds to enforce the lighting standards. That prohibition remains in effect. Lawmakers have cited several reasons for efforts to delay or repeal the law, including consumer concerns about lack of access to affordable incandescent light bulbs, and reports that companies have shut down incandescent bulb factories because they could not afford to retool to make more efficient products. While DOE predicts that energy-efficient alternatives such as compact fluorescent bulbs (CFLs) and light-emitting diodes (LEDs) will gain a larger U.S. market share after EISA is implemented, it also forecasts that incandescent bulbs will be widely available, and widely used, for years to come. U.S. and foreign manufacturers have developed higher-efficiency halogen incandescent bulbs, available at retailers, that meet the law’s minimum standards for 25%-30% electricity savings (compared to 75%-80% savings from CFLs and LEDs) and are competitive in price. The Obama Administration and major lighting companies oppose efforts to repeal the 2007 law, noting that the industry has invested billions of dollars to prepare for the new standards and develop next-generation lighting. The new light bulb standards are taking effect at a time when the lighting industry, due to advances in LED products that often exceed EISA standards, is undergoing the most sweeping technological changes in decades. The LED industry is producing not just more efficient bulbs, but integrated fixtures that can be specially programmed to emit differing colors and types of light and have other potential applications. DOE has been funding solid state lighting research projects to bolster the LED industry, which is already the fastest-growing part of the global lighting market. Some analysts project that LEDs will make up at least half the global lighting market by 2020, driven by technical breakthroughs and enhanced demand from energy-efficiency laws in the United States and other nations. Some lighting executives argue that repealing EISA could undercut LED manufacturing efforts, where U.S. companies have a technological edge. The vast majority of the incandescent and CFL light bulbs Americans now use are imported from China and Mexico. China and other countries are investing heavily in LED production.

Aug 21, 2014

Social Networking and Constituent Communications: Members’ Use of Vine in Congress

In the past 10 years, the rise of social media has expanded the number of options available for communication between Members of Congress and their constituents. Virtually all Members, including all 100 Senators, use Twitter as a tool to communicate legislative, policy, and official actions to interested parties; and the use of other forms of social media, including Facebook, has also proliferated. The adoption of these technologies has enhanced the ability of Members of Congress to fulfill their representational duties by providing greater opportunities for constituents to communicate with Members and their staff. Electronic communications have also raised some concerns. Existing law and chamber regulations on the use of communications media such as the franking privilege have proven difficult to adapt to new technologies. More recently, Members have begun to adopt video and picture sharing social media services. This report examines Members’ use of one of these new electronic communications platforms: Vine. After providing an overview of Vine, the report analyzes patterns of Members’ use of Vine. This report is inherently a snapshot of a dynamic process. As with any new technology, the number of Members using Vine and the patterns of use may change rapidly. Thus, the conclusions drawn from these data cannot be easily generalized, nor can these results be used to predict future behavior. For more information on the adoption and use of social media by Members of Congress, see CRS Report R43018, Social Networking and Constituent Communications: Members’ Use of Twitter and Facebook During a Two-Month Period in the 112th Congress, by Matthew E. Glassman, Jacob R. Straus, and Colleen J. Shogan and CRS Report R43477, Social Media in the House of Representatives: Frequently Asked Questions, by Jacob R. Straus and Matthew E. Glassman.

Aug 21, 2014

The "Militarization" of Law Enforcement and the Department of Defense's "1033 Program

This report discusses the response of SWAT teams to extraordinary cases that has raised questions about the so called "militarization" of law enforcement.

Aug 20, 2014

Clean Coal Loan Guarantees and Tax Incentives: Issues in Brief

Coal represents a major energy resource for the United States. Coal-fired power plants provided approximately 37% of U.S. generated electricity (about 1.5 billion megawatt-hours) in 2012, while consuming over 800 million tons of coal. Power plants that use coal are also a major source of greenhouse gas emissions in the United States, contributing approximately 28% of total U.S. CO2 emissions in 2012. As part of federal efforts to reduce greenhouse gas emissions, loan guarantees and tax incentives have been made available to support private sector investment in “clean coal.” Both loan guarantees and tax incentives were included in the Energy Policy Act of 2005 (EPACT05, P.L. 109-58). Mitigating CO2 emissions has also become the primary focus of U.S. Department of Energy (DOE) efforts within the clean coal research and development program (now Coal R&D) within its Office of Fossil Energy. At issue for Congress is the extent to which the private sector has used the financial incentive tools available, and whether they are the right tools for promoting the development of technology to reduce CO2 emissions from fossil fuel power plants. No loan guarantees have been issued to clean coal projects since enactment of Section 1703 of EPACT05. This legislation authorized the Secretary of Energy to make loan guarantees for projects that (1) avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases; and (2) employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time. Only two projects, both nuclear power-related, have obtained or are on track to obtain loan guarantees under Section 1703. A question for Congress to consider is why no loan guarantees have been issued for clean coal projects under Section 1703, despite several authorizations of appropriations and two solicitations for proposals since enactment of EPACT05. Tax incentives for clean coal were first authorized in EPACT05. EPACT05 codified two new sections in the Internal Revenue Code: Section 48A was added to provide tax credits for qualifying advanced coal projects; and Section 48B provides tax credits to qualifying gasification projects. Additional tax incentives for clean coal were included in P.L. 110-343, the Emergency Economic Stabilization Act of 2008 (EESA). EESA provided additional funding for clean coal investment tax credits. EESA also included the Section 45Q CO2 sequestration credit, under which taxpayers may claim up to a $20 per metric ton credit for qualifying domestic CO2 that is captured and sequestered. Regarding tax incentives, Congress might consider several options: (1) maintain the status quo, which would allow existing tax incentives to phase out; (2) authorize additional funding for existing tax incentives; or (3) redesign tax incentives for clean coal or carbon capture and sequestration related technologies. Several projects that were previously allocated tax credits have been cancelled. A question for Congress is whether there is demand for tax benefits in their current form. Further, are tax incentives an effective tool for encouraging investment in clean coal technologies?

Aug 19, 2014

Improper Payments in High Priority Programs: In Brief

The Improper Payments Information Act (IPIA) of 2002 defines improper payments as payments that should not have been made or that were made in an incorrect amount, including both overpayments and underpayments. This definition includes payments made to ineligible recipients, duplicate payments, payments for a good or service not received, and payments that do not account for credit for applicable discounts. Since FY2004, federal agencies have been required to report on the amount of improper payments they issue each year and take steps to address the root causes of the problem. The data show a significant increase in improper payments from FY2007 ($42 billion) to FY2010 ($121 billion), followed by a slight decrease through FY2013 ($106 billion). The increase in improper payment amounts may be partially attributed to an increase in the number of programs reporting between FY2007 and FY2010, as well as increased federal expenditures for many programs during that same timeframe. The data also show that a small subset of programs has accounted for 85% to 96% of the government’s total improper payments each year. With that in mind, President Obama signed E.O. 13520 in 2009, which requires agencies to take additional measures with regard to these “high priority” programs. Notably, the executive order requires agencies to identify high priority programs, develop detailed plans for reducing related improper payments, and establish annual goals against which progress could be measured. Agencies have identified 13 high priority programs and all but one of them have been reporting data for several years. The data on high priority programs present mixed results. Four high priority programs showed sustained improvement over time, as indicated by steadily decreasing error rates, while four others reported little or no improvement in their error rates. Of the four remaining high priority programs that have reported data, error rates increased for two and slightly decreased for two others. Without further progress in reducing the error rates among high priority programs the government’s total amount of improper payments may continue to exceed $100 billion per fiscal year, as it has since FY2009.

Aug 18, 2014

Manufacturing Nuclear Weapon “Pits”: A Decisionmaking Approach for Congress

A “pit” is the plutonium “trigger” of a thermonuclear weapon. During the Cold War, the Rocky Flats Plant (CO) made up to 2,000 pits per year (ppy), but ceased operations in 1989. Since then, the Department of Energy (DOE) has made at most 11 ppy for the stockpile, yet the Department of Defense stated that it needs DOE to have a capacity of 50 to 80 ppy to extend the life of certain weapons and for other purposes. This report focuses on 80 ppy, the upper end of this range. Various options might reach 80 ppy. Successfully establishing pit manufacturing will require, among other things, enough laboratory space and “Material At Risk” (MAR). MAR is essentially the amount of radioactive material permitted in a building that could be released in an accident; there must be enough MAR available for manufacturing within the MAR “ceiling.” PF-4, the main plutonium building at Los Alamos National Laboratory (LANL), or other structures would house manufacturing. Analytical chemistry (AC), which analyzes the composition of samples from each pit to support manufacturing, will also require availability of MAR and space. For an option to support 80 ppy, MAR and space available for manufacturing and AC must exceed MAR and space required for 80 ppy. “Margin” is the amount by which an available amount exceeds a required amount. This report presents amounts of MAR and space potentially available for manufacturing under several options, though they may require updating. Calculation of margin—needed to determine if an option passes a minimum test for feasibility—also requires data on MAR and space required for 80 ppy, yet these data have never been calculated rigorously. As a result, it is not known if an option would increase capacity too little (making an option infeasible), too much (making an option too costly), or by an appropriate amount. Congress could direct the National Nuclear Security Administration, which operates the nuclear weapons program, to provide data on space and MAR required to manufacture 80 ppy. These data would permit calculation of space margin and MAR margin as static numbers. However, the situation is dynamic: uncertainties may materialize over time, increasing or decreasing margin. AC poses different issues. It is needed to support production. It requires much space but uses little MAR. The nuclear weapons complex has ample excess space and MAR available for AC, so margin is not at issue, though such factors as logistics might become an issue. Thus, three key decisions face Congress in deciding how to produce 80 ppy: Decision 1: For pit manufacturing, is there currently enough margin for space and MAR in PF-4? If not, what can be done to provide it? Decision 2: Once enough margin for space and margin for MAR are provided for pit manufacturing, what steps can be taken to maintain these margins over decades in the face of uncertainties? Decision 3: How much AC should be done at LANL, what is needed to make the space and MAR at LANL sufficient to support that amount of AC, and how much, if any, AC should be done at other sites? Choosing among options also requires data on how options compare on cost and other metrics, setting up a process for downselection. This report is best viewed in color, as it contains many multicolored graphics.

Aug 15, 2014

Reducing the Budget Deficit: Overview of Policy Issues

The federal budget deficit was the largest it has been since World War II as a percentage of GDP from 2009 to 2012, peaking at 10.1% of GDP. This occurred because spending reached its highest share of GDP since 1945 and revenues reached their lowest share of GDP since 1950. Since then, the deficit has declined to a projected 2.8% of GDP in 2014, which is still above the 1946 to 2008 average. Over the next 25 years, deficits are projected to become very large again under current law. The recent decline in the deficit is partly due to improvements in the economy, the expiration of temporary measures taken in response to the recession, and spending cuts (mainly to discretionary spending). Spending was cut by the Budget Control Act of 2011 (BCA; P.L. 112-25) and the reduction in overseas contingency operations (OCO), primarily in Iraq and Afghanistan. Since September 2008, legislative changes to spending have added a cumulative $1.12 trillion to deficits and legislative changes to revenues, mainly the extension of expiring tax provisions, have added $1.75 trillion to deficits, excluding resulting interest costs. Looking forward, several uncertainties are inherent in the baseline that may lead to different outcomes than projected. There have been large errors to budget projections historically, in part because economic forecasting is subject to large errors. The budget has also proven to be highly sensitive to recessions, and CBO does not project a recession in its 10-year projection. Budget projections also do not assume any significant changes in spending on future wars or disasters. The baseline projection follows current law, assuming that the “doc fix” and tax “extenders” will expire as scheduled. If Congress temporarily extends either, as it has done regularly in the past, the deficit will be larger than projected. In the long run, legislative changes will be needed to reduce spending or increase taxes to keep the debt on a sustainable path. Postponing action requires larger changes to be made in the long run, and limits the ability to phase in changes gradually. Economists view the debt as currently unsustainable because it is projected to grow faster than gross domestic product (GDP) indefinitely under current policy, causing an ever growing share of national income to be devoted to servicing the debt. The main source of long-term fiscal unsustainability is the growth in elderly entitlement spending. In particular, spending on major health programs, such as Medicare and Medicaid, is assumed to continue to grow faster than GDP, as it has historically. Overall, mandatory spending has grown as a share of GDP, rising from 4.7% of GDP, when data were first compiled in 1962, to a projected 12.3% of GDP in 2014, and is projected to continue rising. By contrast, discretionary spending has fallen from 12.3% of GDP in 1962 to a projected 6.8% of GDP in 2014, and under the baseline it is projected to decline to its lowest share of GDP ever, primarily because of the BCA’s statutory caps. Revenues are projected to stay near their historical average over the next 10 years. Economic theory predicts that deficits have a stimulative effect on the economy during recessions, but harm economic growth by resulting in an increase in interest rates or the trade deficit during economic booms. Thus, the state of the economy is a consideration for the timing of deficit reduction. Options for deficit reduction on the spending side are constrained by the fact that Social Security, Medicare, net interest, and defense discretionary spending make up almost two-thirds of total spending. On the revenue side, 80% of revenue is raised by income and payroll taxes.

Aug 7, 2014

Juvenile Victims of Domestic Sex Trafficking: Juvenile Justice Issues

There has been growing concern over sex trafficking of children in the United States. Demand for sex with children (and other forms of commercial sexual exploitation of children) is steady, and profit to sex traffickers has increased. Law enforcement is challenged not only by prosecuting traffickers and buyers of sex with children, but also by how to handle the girls and boys whose bodies are sexually exploited for profit. Under the Victims of Trafficking and Violence Protection Act of 2000 (TVPA; P.L. 106-386), the primary law that addresses trafficking, sex trafficking of children is a federal crime; moreover, an individual under the age of 18 who is involved in commercial sex activities is considered a victim of these crimes. Despite this, at the state and local levels, juvenile victims of sex trafficking may at times be treated as criminals or juvenile delinquents rather than victims of crime. Of note, there are no comprehensive data that address the number of prostituted or otherwise sexually trafficked children, and there are limited studies on the proportion of these juveniles who are treated as offenders. A number of factors may, alone or in combination, contribute to the criminalization of juvenile trafficking victims. One is a lack of victim identification and an awareness of key indicators that may help in identifying victims. Even in states that statutorily consider juveniles involved in commercial sex to be victims, law enforcement may not have received sufficient training to be able to identify victims. Another factor is a lack of secure shelters and specialized services for victims; despite knowing that the juvenile is a victim, law enforcement may charge the individual with a crime so as to place the victim into one of the only available safe and secure environments—a detention facility within the juvenile justice system. Researchers and policy makers have suggested a number of options aimed at preventing minor trafficking victims from being caught up in the juvenile justice system and diverting them to programs and services that can help rehabilitate and restore these youth. These have included supporting law enforcement training on human trafficking, enhancing law enforcement and community partnerships, enacting safe harbor laws preventing the prosecution of victims as offenders, establishing diversion programs for juveniles involved in commercial sex, and establishing provisions to seal or expunge records of trafficked youth’s involvement in the juvenile justice systems. Because the federal government considers juveniles involved in prostitution as victims of trafficking, and because much of the policing to combat prostitution and sex trafficking—both of adults and children—happens at the state level, federal policy makers have considered how to influence states’ treatment of trafficking victims (particularly minors) such that state policies are more in line with those of the federal government. Financial incentives from federal grants and victim compensation funds could be provided through a variety of avenues. These routes include TVPA-authorized grants, juvenile and criminal justice grants, Violence Against Women Act (VAWA; P.L. 113-4)-authorized grants, and the Crime Victims Fund.

Aug 5, 2014

Export-Import Bank Reauthorization: Frequently Asked Questions

This report addresses frequently asked questions about Ex-Im Bank, grouped in the following categories: congressional interest and the Ex-Im Bank reauthorization debate; market context; international context; organizational structure and management; programs; statutory requirements and policies; risk management; budget and appropriations; implications of a sunset in authority; and historical and current approaches to reauthorization.

Aug 1, 2014

Asylum Policies for Unaccompanied Children Compared with Expedited Removal Policies for Unauthorized Adults: In Brief

The sheer number of Central American children coming to the United States who are not accompanied by a parent or legal guardian and who lack proper immigration documents is raising complex and competing sets of humanitarian concerns and immigration control issues. Adults and families from the same three countries—El Salvador, Guatemala, and Honduras—have also been coming in increasing numbers over the same period. Current law provides that unaccompanied alien children (also referred to as unaccompanied children) are treated differently than adults or children with their parents who come to the United States without proper immigration documents. This report focuses on how unaccompanied alien children are treated in comparison to unauthorized adults and families with children in the specific contexts of asylum and expedited removal. Foreign nationals apprehended along the border or arriving at a U.S. port who lack proper immigration documents or who engage in fraud or misrepresentation are placed in expedited removal; however, if they express a fear of persecution, they receive a “credible fear” hearing with a U.S. Citizenship and Immigration Services Bureau (USCIS) asylum officer and—if found credible—are referred to an Executive Office for Immigration Review (EOIR) immigration judge for a hearing. To ultimately receive asylum in the United States, foreign nationals must demonstrate a well-founded fear that if returned home, they will be persecuted based upon one of five characteristics: race, religion, nationality, membership in a particular social group, or political opinion. The Trafficking Victims Protection Reauthorization Act (TVPRA) of 2008 revised the procedures and policies for those unaccompanied alien children who file for asylum, most notably requiring that unaccompanied children from contiguous countries (i.e., Canada and Mexico) be screened for possible trafficking risks and asylum claims. Subsequently, the Administration opted to screen all unaccompanied children for possible asylum claims. In addition, the TVPRA gives USCIS asylum officers “initial jurisdiction over any asylum application filed by” an unaccompanied alien child. Only a small portion of the unaccompanied children apprehended by Customs and Border Protection (CBP) have requested asylum with USCIS thus far. While the numbers requesting asylum have increased, they have not increased at as fast a rate as the overall increase in apprehensions of unaccompanied children. Through the third quarter of FY2014, USCIS reports that they have adjudicated 167 cases and granted asylum to 108 unaccompanied children. Only two of these approved cases were for unaccompanied children apprehended in FY2014. All of the other approved cases were for unaccompanied children apprehended in prior years. This report builds on a set of CRS reports on issues surrounding unaccompanied alien children: CRS Report R43599, Unaccompanied Alien Children: An Overview, by Lisa Seghetti, Alison Siskin, and Ruth Ellen Wasem; CRS Report IN10107, Unaccompanied Alien Children: A Processing Flow Chart, by Lisa Seghetti; CRS Report R43628, Unaccompanied Alien Children: Potential Factors Contributing to Recent Immigration, coordinated by William A. Kandel; CRS Report R43623, Unaccompanied Alien Children—Legal Issues: Answers to Frequently Asked Questions, by Kate M. Manuel and Michael John Garcia; and CRS Report R41731, Central America Regional Security Initiative: Background and Policy Issues for Congress, by Peter J. Meyer and Clare Ribando Seelke.

Jul 30, 2014

Protecting Civilian Flights from Missiles

This report briefly outlines the history of incidents involving civilian flights being hit by shoulder fired missiles and discusses the Directed Infrared Countermeasure (DIRCM) systems, which were developed to be mounted on commercial airliners for defense against infrared guided missiles and were never widely implemented. The report discusses the limitations of DIRCM systems, especially in the context of Malaysia Airlines Flight 17, which would not have been saved by such a system due to having been brought down by a radar-guided missile. The report also examines alternative ways to protect commercial airliners from missile attacks, such as flight techniques and ground-based systems.

Jul 28, 2014

Possible Missile Attack on Malaysia Airlines Flight 17

This report examines the circumstances surrounding the crash of Malaysia Airlines Flight 17 (MH17). The report considers several factors that lead investigators to believe that the plane may have been shot down by a surface-to-air missile fired from a Buk road-mobile missile erector-launcher, including the type of damage directly sustained by the plane, the large debris field, the crash's proximity to an active conflict zone in which military aircraft had recently been shot down and U.S. intelligence that detected a missile launch from the area around the time the plane was overhead.

Jul 28, 2014

Juice Labeling and Pom Wonderful v. Coca-Cola: A Legal Overview

This report discusses two different federal statutes that regulate beverage labels. The Food, Drug, and Cosmetic Act (FDCA) and its implementing regulations outline requirements for beverage labels reflecting the different ingredients of the juice. The FDCA also prohibits misbranded food and beverages when labels are false and misleading. The Lanham Act, the federal trademark statute that regulates unfair competition, also prohibits misleading labels and advertisements that may hurt a competitor’s business and/or goodwill. While these two statutes both impact juice labels, the overall purpose and enforcement of these two statutes differ. Only the federal government can enforce the FDCA, while the Lanham Act allows competitors to enforce the act’s principles in the courts. The Lanham Act prohibits unfair competition, while the FDCA seeks to ensure public health and safety. These similarities and differences raise questions regarding the legal options for businesses claiming harm from a misleading or misbranded beverage label, such as the negative impact on the market for their products. Such questions include whether a business can seek relief against a competitor’s misleading juice label in court. The courts and parties in Pom Wonderful v. Coca-Cola encountered this issue, specifically regarding Coca-Cola’s allegedly misleading juice label. In 2008, Pom brought suit against Coca-Cola alleging that Coca-Cola’s Pomegranate Blueberry beverage name and label violates the Lanham Act and California’s unfair competition laws because it misleads consumers to believe that the beverage consists of primarily pomegranate and blueberry juices when it actually contains mostly apple and grape juices. The district court in California and the Ninth Circuit held that the FDCA precludes Pom’s Lanham Act claim because of the Food and Drug Administration’s (FDA’s) exclusive authority to regulate food labels and the absence of any FDA action against Coca-Cola for this label. The U.S. Supreme Court held that Pom may bring a Lanham Act claim alleging unfair competition from misleading beverage labels regulated by the FDCA because of the absence of anything in the text, legislative history, or structure of the FDCA or the Lanham Act that shows congressional intent to preclude such Lanham Act claims. The two legal issues before the courts in Pom Wonderful focused on the interaction of federal statutes with both state and federal laws. On remand, the lower courts will have to consider again the issues of preemption, specifically whether the FDCA preempts Pom’s California state law claims when the state law provisions are not identical to the federal law. Additionally, the Supreme Court’s preclusion analysis in Pom Wonderful adds to the case history addressing the preclusion of Lanham Act claims by the FDCA. However, as consumers appear increasingly concerned about how food products are labeled, further litigation may be needed to clarify how the Supreme Court’s holding in Pom Wonderful applies to Lanham Act food and beverage claims that are dissimilar to Pom’s Lanham Act claim. Similarly, it is unclear how Pom Wonderful may apply to other FDA-regulated products such as drugs and cosmetics. Despite the possibility for further litigation, Pom Wonderful provides a useful opportunity to observe and understand the interplay between two federal statutes that can be applied to the wider federal regulatory context.

Jul 28, 2014

The Effectiveness of the Community Reinvestment Act

This report informs the congressional debate concerning the Community Reinvestment Act (CRA) effectiveness to incentivize bank lending and investment activity tolow- and moderate-income (LMI) borrowers. After a discussion of the CRA's origins, the examination process and bank activities that are eligible for consideration of CRA credits are presented. Next, the difficulty of determining the CRA's influence on bank behavior is discussed.

Jul 25, 2014

The President’s Emergency Plan for AIDS Relief (PEPFAR): Summary of Recent Developments

Jul 25, 2014

The Receipt of Gifts by Federal Employees in the Executive Branch

This report provides information on the federal statutes, regulations, and guidelines concerning the restrictions on the acceptance of gifts and things of value by officers or employees in the executive branch of the United States government.

Jul 25, 2014

The Maternal and Child Health Services Block Grant: Background and Funding

The Maternal and Child Health (MCH) Services Block Grant program, authorized under Title V of the Social Security Act, is a flexible source of funds that states use to support maternal and child health programs. The program provides grants to states and territories to enable them to coordinate programs, develop systems, and provide a broad range of direct health services. In addition to block grants to states, the MCH Services Block Grant includes a set-aside for Special Projects of Regional and National Significance (SPRANS), and another set-aside for the Community Integrated Service Systems (CISS) program. The Maternal and Child Health Bureau of the Health Resources and Services Administration (HRSA) within the Department of Health and Human Services (HHS) administers the block grant. The Maternal and Child Health Bureau of HRSA also receives funding for other maternal and child health programs authorized under both Title V of the Social Security Act and the Public Health Service Act, including maternal and infant home visiting and autism services. The MCH Services Block Grant received an appropriation of $634 million in FY2014. Of that amount, an estimated $546.6 million was for block grants to states (86%), $77.1 million was for SPRANS (12%), and $10.3 million was for CISS (2%). The President’s budget requested $634 million for the program in FY2015. Funding for the MCH Services Block Grant is discretionary and subject to the annual appropriations process. Full-year appropriations for FY2015 have yet to be enacted. Title V programs, including the MCH Services Block Grant, serve women and children who are covered by public and private insurance, as well as those who have no insurance coverage. MCH Services Block Grant funds are distributed for the purpose of funding core public health services provided by maternal and child health agencies. These core services are often divided into four categories: infrastructure-building, population-based, enabling, and direct health care. A wide array of programs is supported in each of these categories, including newborn screening, health services for children with special health care needs, and immunization programs. Another main objective of the MCH Services Block Grant is to increase pediatric workforce capacity, and to link low-income children and families to other services and programs, such as Medicaid. To receive MCH Services Block Grant funds, states are required to (1) conduct a needs assessment every five years; (2) provide an annual report, including program participation data, state maternal and child health measures, and state pediatric and family workforce measures; and (3) ensure that an independent audit is performed every two years. HRSA, in turn, must report to Congress on the activities carried out under the SPRANS and CISS programs, in addition to providing a summary of state reports on block grant activities. This report provides MCH Services Block Grant background and funding information. It also includes selected program participation data. Selected maternal and child health indicators are presented to provide readers with context on issues that Congress has sought to address through MCH Services Block Grant funding. Although improvement in these measures is an objective of Title V funding, it is important to note that Title V funding is only one component affecting these measures. Other federal and state health and social services policies, as well as complex societal issues, substantially affect these measures and maternal and child health in general.

Jul 24, 2014

Child Welfare: Health Care Needs of Children in Foster Care and Related Federal Issues

The report begins with a discussion of major findings. It then briefly describes the foster care population and their unique health-related issues. Next is an overview of the federal programs and policies in three areas--child welfare, Medicaid, and private health insurance--that directly or indirectly address some of the health care needs of such children and young adults. The report concludes with a discussion of issues pertaining to these federal policies.

Jul 24, 2014

The U.S. Wine Industry and Selected Trade Issues with the European Union

Jul 24, 2014

Free Exercise of Religion by Closely Held Corporations: Implications of Burwell v. Hobby Lobby Stores, Inc.

This report analyzes the Court's decision in Hobby Lobby, including arguments made between the majority and dissent, to clarify the scope of the decision and potential impacts for future interpretation of RFRA's applicability. It also examines potential legislative responses, should Congress consider addressing the current applicability of RFRA. Finally, the report addresses the decision's effect on requirements that employers offer contraceptive coverage in group health plans under federal or state law.

Jul 23, 2014

Temporary Assistance for Needy Families (TANF): Eligibility and Benefit Amounts in State TANF Cash Assistance Programs

This report describes state the Temporary Assistance for Needy Families (TANF) financial eligibility rules and maximum benefit amounts. The report discusses cash assistance benefit amounts for needy families that are not automatically adjusted for inflation by the states, and have lost considerable value in terms of their purchasing power over time.

Jul 22, 2014

Federal Student Loan Forgiveness and Loan Repayment Programs

Student loan forgiveness and loan repayment programs provide borrowers a means of having all or part of their student loan debt forgiven or repaid in exchange for work or service in specific fields or professions or following a prolonged period during which their student loan debt burden is high relative to their income. In both loan forgiveness and loan repayment programs, borrowers typically qualify for benefits by working or serving in certain capacities for a specified period of time or by satisfying other program requirements over an extended term. Upon qualifying for benefits, some or all of a borrower’s student loan debt is forgiven or paid on his or her behalf. One of the most important distinctions among these types of programs is whether the availability of benefits is incorporated into the loan terms and conditions and thus considered an entitlement to qualified borrowers, or whether benefits are made available to qualified borrowers at the discretion of the entity administering the program and subject to the availability of funds. For the purposes of this report, the former types of programs are referred to as loan forgiveness while the latter are referred to as loan repayment. Loan forgiveness and loan repayment programs typically are intended to support one or more of the following goals: Provide a financial incentive to encourage individuals to enter public service. Provide a financial incentive to encourage individuals to enter a particular profession, occupation, or occupational specialty. Provide a financial incentive to encourage individuals to remain employed in a high-need profession or occupation—often in certain locations or at certain facilities. Provide debt relief to borrowers who, after repaying their student loans as a proportion of their income for an extended period of time, have not completely repaid their entire student loan debt. The number and availability of loan forgiveness and loan repayment programs have expanded considerably since the establishment of the first major federal loan forgiveness program by the National Defense Education Act of 1958. Currently, over 50 loan forgiveness and loan repayment programs are authorized, and at least 30 of which were operational as of October 1, 2013. While existing loan forgiveness and loan repayment programs may support similar broader goals, there is great variety across programs in their design and scope. For instance, some programs are widely available to all borrowers who meet program eligibility criteria. However, many programs are narrowly focused on supporting specific public service or workforce needs and are available only to individuals serving in certain occupations or working in certain geographic regions, or individuals employed by certain federal agencies. In some programs, the availability of benefits is incorporated into the terms and conditions of borrowers’ loans and is more certain, whereas in other programs, the availability of benefits is subject to discretionary funding and award criteria. Programs are also distinguished by types of loans that qualify for forgiveness or repayment, qualifying periods of service, the amount of debt that may be discharged, and the tax treatment of discharged indebtedness. Congress may explore whether loan forgiveness and loan repayment programs are effectively achieving policy objectives. Several issues might be examined. For instance, should multiple loan forgiveness and loan repayment programs continue to exist for providing debt relief to borrowers who engage in similar types of activities? Does the structure of some programs lead to a financial windfall for borrowers who engage in the same type of activity they might otherwise have in the absence of loan forgiveness and loan repayment benefits? Are programs appropriately targeted? Is sufficient information available to assess whether existing programs are effectively achieving their intended purposes?

Jul 22, 2014

“Black Boxes” in Passenger Vehicles: Policy Issues

An event data recorder (EDR) is an electronic sensor installed in a motor vehicle that records certain technical information about a vehicle’s operational performance for a few seconds immediately prior to and during a crash. Although over 90% of all new cars and light trucks sold in the United States are equipped with them, the National Highway Traffic Safety Administration (NHTSA) is proposing that all new light vehicles have EDRs installed in the future. Under previously adopted NHTSA rules, these devices have to capture at least 15 types of information related to the vehicle’s performance in the few seconds just before and immediately after a crash serious enough to result in deployment of airbags. EDRs have the potential to make a significant contribution to highway safety. For example, EDR data showed that in several cases a Chevrolet Cobalt’s ignition switch turned the engine off while the car was still moving, causing the car to lose power steering and crash; the data directly contributed to the manufacturer’s decision to recall 2.6 million vehicles. EDR data could also be used, sometimes in conjunction with other vehicle technologies, to record in the few seconds before an accident such data as driver steering input, seat occupant size, and sound within a car. The privacy of information collected by EDRs is a matter of state law, except that federal law bars NHTSA from disclosing personally identifiable information. The privacy aspects of EDRs and the ownership of the data they generate has been the subject of legislation in Congress since at least 2004. The House passed a floor amendment to the transportation appropriations bill in 2012 that would have prohibited use of federal funds to develop an EDR mandate, but it was not enacted. The Senate passed two EDR-related provisions in its surface transportation reauthorization bill (S. 1813) in 2012, mandating EDRs on new cars sold after 2015 and directing a Department of Transportation study of privacy issues; they were not included in the final bill. In the 113th Congress, two privacy-related EDR bills have been introduced. H.R. 2414, sponsored by Representative Capuano, would require manufacturers to post a window sticker in each new car, stating that there is an EDR in the vehicle, where it is located, the type of information it records, and the availability of that information to law enforcement officials. It would prohibit the sale of vehicles after 2015 unless vehicle owners can control the recording of information on the EDR. The legislation also states that any data recorded by an EDR is the vehicle owner’s property and can be retrieved only with the owner’s consent, in response to a court order, or by a vehicle repair technician. It is pending in the House Energy and Commerce and Judiciary Committees. In April 2014, the Senate Committee on Commerce, Science and Transportation ordered reported S. 1925, the Driver Privacy Act, sponsored by Senators Hoeven and Klobuchar. The bill would limit access to EDR data to the vehicle owner or lessee. Exceptions would allow access if authorized by judicial or administrative authorities for the retrieval of admissible evidence, with the informed written consent of owners or lessees for any purpose, and for safety investigations, emergency response purposes, or traffic safety research. If used for safety research, information that would identify individual owners and vehicle identification numbers would have to be redacted. The bill requires NHTSA to conduct a study to determine the amount of time EDRs should capture and record data, and to issue regulations on that subject within two years of submitting the study to Congress. In addition, on June 10, 2014, during consideration of H.R. 4745, the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act for 2015, the House adopted by voice vote an amendment sponsored by Representative Yoho that would bar use of federal funds to enforce regulations mandating passenger vehicle EDRs.

Jul 22, 2014

Funding for the Impact Aid Program: Options for Budget Year Appropriations, Forward Funding, and Advance Appropriations

Administered by the U.S. Department of Education (ED), the Impact Aid program is one of the oldest federal education programs, dating from 1950. Impact Aid, authorized under Title VIII of the Elementary and Secondary Education Act (ESEA, P.L. 89-10, as amended), compensates local educational agencies (LEAs) for “substantial and continuing financial burden” resulting from federal activities. These activities include federal ownership of certain lands, as well as the enrollments in LEAs of children of parents who work or live on federal land (e.g., children of parents in the military and children living on Indian lands). The federal government provides compensation because these activities deprive LEAs of the ability to collect property or other taxes from these individuals (e.g., members of the Armed Forces living on military bases) or their employers, even though the LEAs are obligated to provide free public education to their children. Thus, Impact Aid is intended to compensate LEAs for the resulting loss of tax revenue. The largest Impact Aid payment, Section 8003(b) payments (also known as Basic Support Payments or BSPs), compensates LEAs for enrolling “federally connected” children. For FY2014, Section 8003(b) accounted for $1.151 billion, approximately 89.3% of all funds appropriated for the Impact Aid program. As Section 8003(b) payments account for the majority of all Impact Aid funding, this report primarily focuses on these payments. All Impact Aid payments are funded through the Labor, Health and Human Services, Education, and Related Agencies (L-HHS-ED) annual appropriations bill. Funds are provided through “budget year appropriations,” meaning the funds would be available for the budget year beginning on the first day of the next fiscal year (e.g., October 1, 2013, for FY2014), unless otherwise specified. This availability may be retroactive if annual appropriations are not enacted until after the fiscal year has begun. The Impact Aid program is also authorized to receive appropriations through advance appropriations and forward funding. Advance appropriations become available one or more fiscal years after the budget year covered by a given appropriations act (e.g., for FY2015 and an FY2014 appropriations act). Forward funding becomes available during the last quarter of the budget year (e.g., July 1), but remains available through at least the following fiscal year (e.g., July 1, 2014, through September 30, 2015). Under the current mechanism for funding Section 8003(b) payments and the use of continuing resolutions rather than enacting regular appropriations acts prior to the start of the fiscal year, LEAs are generally unable to receive their full Section 8003(b) payments until sometime after October 1, because of delays in when regular appropriations or a full-year continuing resolution is enacted. This can create financial difficulties for LEAs, particularly those that are heavily dependent on Impact Aid funding. Providing funds for Section 8003(b) payments through advance appropriations or forward funding has the potential to ease some of these difficulties, but has budget enforcement implications that may complicate any attempt to transition to an alternative funding schedule. This report considers three different appropriations scenarios for Impact Aid Section 8003(b) payments that are an alternative to budget year appropriations: (1) providing forward funding for Section 8003(b) payments, (2) providing advance appropriations for Section 8003(b) payments, or (3) using both forward funding and advance appropriations to provide Section 8003(b) payments, as is done for other federal education programs such as Title I-A Grants to Local Educational Agencies authorized by the ESEA or Grants to States authorized under Part B of the Individuals with Disabilities Education Act (IDEA). Each of these scenarios has budget implications that may require at least a one-time increase in discretionary appropriations, a change in the limit set on advance appropriations, or some combination of both.

Jul 22, 2014

State CO2 Emission Rate Goals in EPA's Proposed Rule for Existing Power Plants

This report discusses the methodology EPA used to establish state-specific CO2 emission rate goals that apply to states' overall electricity generation portfolio.

Jul 21, 2014

Shipping U.S. Crude Oil by Water: Vessel Flag Requirements and Safety Issues

New sources of crude oil from North Dakota, Texas, and western Canada have induced new routes for shipping crude oil to U.S. and Canadian refineries. While pipelines have traditionally been the preferred method of moving crude overland, they either are not available or have insufficient capacity to move all the crude from these locations. While rail has picked up some of this cargo, barges, and to a lesser extent tankers, also are moving increasing amounts of crude in domestic trade. The rather sudden shift in transportation patterns raises concerns about the safety and efficiency of oil tankers and barges. The United States now imports less oil than five years ago by oceangoing tankers, while more oil is moving domestically by river and coastal barges. However, the Coast Guard still lacks a safety inspection regime for barges similar to that which has long existed for ships. The possibility of imposing an hours-of-service limit for barge crews as part of this regime is controversial. Congress called for a barge safety inspection regime a decade ago, but the related rulemaking is not complete. The Coast Guard’s progress in revamping its Marine Safety Office is a related issue that Congress has examined in the past. The majority of U.S. refineries are located near navigable waters to take advantage of economical waterborne transport for both import and export. However, for refineries switching from imported to domestic crude oil, the advantage diminishes considerably. This is because the Jones Act, a 1920 law that seeks to protect U.S. shipyards and U.S. merchant sailors in the interest of national defense, restricts domestic waterborne transport to U.S.-built and -crewed vessels. The purchase price of U.S.-built tankers is about four times the price of foreign-built tankers, and U.S. crewing costs are several times those of foreign-flag ships. The small number of U.S.-built tankers makes it difficult for shippers to charter tankers for a short period or even a single voyage, highly desirable in an oil market with shifting supply patterns. The unavailability of U.S.-built tankers may result in more oil moving by costlier, and possibly less safe, rail transport than otherwise would be the case. Some Texas oil is moving to refineries in eastern Canada, bypassing refineries in the northeastern United States, because shipping to Canada on foreign-flag vessels is much cheaper than shipping domestically on Jones Act-eligible ships. Some of these issues may be addressed in the Coast Guard and Maritime Transportation Act of 2014 (H.R. 4005), which has passed the House, and the Coast Guard Authorization Act for Fiscal Years 2015 and 2016 (S. 2444), introduced in the Senate. The House bill requests federal agency studies and recommendations towards improving the competitiveness of the U.S.-flag industry while the Senate bill contains provisions related to oil spill response.

Jul 21, 2014

U.S. Sanctions on Russia in Response to Events in Ukraine

Jul 18, 2014

Mobile Technology and Spectrum Policy: Innovation and Competition

Jul 18, 2014

Oil and Gas Tax Issues in the Tax Reform Act of 2014 and the President’s FY2015 Budget Proposal

Jul 17, 2014

Unaccompanied Alien Children: A Processing Flow Chart

Jul 16, 2014

FY2015 National Defense Authorization Act: Selected Military Personnel Issues

The Congressional Research Service (CRS) has selected a number of the military personnel issues considered in deliberations on the initial House-passed version of the National Defense Authorization Act for Fiscal Year 2015. This report provides a brief synopsis of sections that pertain to personnel policy. These include end strengths, pay raises, health care, and sexual assault, as well as less prominent issues that nonetheless generate significant public interest.

Jul 16, 2014

Child Welfare: An Overview of Federal Programs and Their Current Funding

This report begins with a review of federal appropriations activity in FY2014 as it relates to child welfare programs, including the effect of the automatic spending cuts, known as sequestration. The report provides a short description of each federal child welfare program, including its purpose and recent (FY2012-FY2014) funding levels.

Jul 16, 2014

Presidential Appointments to Full-Time Positions in Executive Departments During the 111th Congress, 2009-2010

This report explains the process for filling positions to which the President makes appointments with the advice and consent of the Senate (also referred to as PAS positions). It also identifies, for the 111th Congress, all nominations to full-time positions requiring Senate confirmation in the 15 executive departments. It excludes appointments to regulatory boards and commissions and independent and other agencies, which are covered in other CRS reports. The appointment process for advice and consent positions consists of three main stages. The first stage is selection, clearance, and nomination by the President. This step includes preliminary vetting, background checks, and ethics checks of potential nominees. At this stage, if the position is located within a state, the President may also consult with Senators who are from his party. The second stage of the process is consideration of the nomination in the Senate, most of which takes place in committee. Finally, if a nomination is approved by the Senate, the President may then present the nominee with a signed commission, making the appointment official. During the 111th Congress, the President submitted to the Senate 347 nominations to executive department full-time positions. Of these 347 nominations, 293 were confirmed; 16 were withdrawn; and 38 were returned to him in accordance with Senate rules. For those nominations that were confirmed, an average of 73.2 days elapsed between nomination and confirmation. The median number of days elapsed was 52.0. The President made 10 recess appointments to full-time positions in executive departments during the 111th Congress. Information for this report was compiled from data from the Senate nominations database of the Legislative Information System (LIS) http://www.congress.gov/nomis/, the Congressional Record (daily edition), the Weekly Compilation of Presidential Documents, telephone discussions with agency officials, agency websites, the United States Code, and the 2008 “Plum Book” (United States Government Policy and Supporting Positions). This report will not be updated.

Jul 15, 2014

Social Security: The Lump-Sum Death Benefit

Congressional Research Service 7-5700 www.crs.gov R43637 Summary When a worker who is insured by Social Security and living with a spouse dies, the spouse is entitled to a lump-sum death benefit of $255. If there is no such spouse, the payment can be made to a surviving child who is receiving or is eligible to receive benefits based on the deceased person’s work. In the majority of deaths, however, no payment is made. The death benefit used to be a more important part of Social Security, but the payment has been fixed at $255 for the past four decades, during which inflation has eroded its value. At the same time, the real value of other Social Security benefits has increased. Total federal spending on lump-sum death benefits is now about $200 million, only 0.03% of the total Social Security benefits. Although the benefit was once linked to burial expenses and is sometimes still referred to as a “funeral benefit,” it no longer has any legal connection with funeral expenses. Some proposals would have targeted the death benefit to those with the greatest need, increased the benefit, or eliminated it. Contents Introduction 1 History of the Lump-Sum Death Benefit 1 Current Eligibility Rules 2 Number of Benefit Payments and Total Spending 2 Proposals to Change or Eliminate the Lump-Sum Death Benefit 3 Figures Figure 1. The Diminishing Significance of the Lump-Sum Death Benefit 3 Contacts Author Contact Information 4 Introduction Following the death of a worker beneficiary or other insured worker, Social Security makes a one-time payment of $255 to the surviving spouse or, if there is no spouse, to surviving dependent children. In 2012, such payments were made for about 770,000 deaths, for a total of about $200 million in benefit payments. The death payment was capped at $255 in 1954 and since 1982 all payments have equaled $255, so the real (inflation-adjusted) value of the benefit now declines each year. History of the Lump-Sum Death Benefit Survivors’ benefits were not included in the original Social Security Act of 1935, but the program did include a lump-sum benefit that would be paid if a worker died before the retirement age of 65. That provision provided some benefits to families who otherwise would have paid Social Security taxes but received no benefits. The benefit equaled 3.5 percent of the worker’s covered earnings—those earnings that were subject to the Social Security payroll tax. Those payments were made from 1937 through 1939. When monthly survivors’ benefits were added to the program in 1939, a limited version of the lump-sum death benefit was retained. It was paid only in cases when no survivors’ benefits were paid on the basis of the deceased worker’s earnings record. When made, the payment equaled six times the primary insurance amount (PIA). The PIA generally equals the monthly benefit amount that a worker would have received. The payment was made to a family member or to an individual who helped pay for the funeral. In 1950, eligibility for the payment was expanded to include cases where survivors’ benefits were also paid “so that survivors’ benefits need not be diverted for payment of burial expenses of an insured worker.” The benefit was therefore paid in nearly every death of a worker who was insured by Social Security. The 1950 legislation also sharply increased the PIA (and therefore increased regular monthly benefit levels). In order to maintain the value of the lump-sum benefit, the formula was changed to equal three times the PIA, rather than six times. The 1954 Social Security Amendments kept the formula of three times the PIA but capped the benefit at $255, which was approximately the maximum benefit under the 1950 law. By 1974, the minimum PIA was $85, or one-third of the $255 cap, so the minimum lump sum benefit was also $255. As a result, nearly all lump-sum benefits have been $255 since. Because some payments are based on PIAs from earlier years, some payments were slightly lower. In 1974, the average payment was $254.64, and it has been $255.00 since 1982. Currently, the payment may be lower if the deceased was covered by a foreign system with which the United States has an agreement to integrate benefits, known as a totalization agreement. Finally, in 1981, eligibility for the lump-sum payment was restricted to limited categories of survivors. That change reduced the number of payments made by nearly half, from 1.55 million in 1980 to 800,000 in 1982. Current Eligibility Rules If a surviving spouse is living with the worker at the time of death, the benefit is paid to the spouse. If there is no such spouse, the benefit is paid to a spouse or child who is receiving or is eligible to receive monthly benefits on the worker’s record. If the deceased does not have any survivors in those categories, no death benefit is paid. If there are multiple eligible children, the benefit is split evenly among them. Number of Benefit Payments and Total Spending In 2012, the Social Security Administration paid $200 million in lump-sum benefits for 769,988 deaths. Because the $255 payment was split between multiple recipients in some cases, the agency made a total of 805,911 payments. The number of payments is projected to remain at about the same level in coming years, so total spending will also remain at approximately the same dollar level. For most deaths, no lump-sum death benefit is paid. A benefit is paid for about 38% of deaths of insured workers. The real value of the death benefit has declined dramatically since it was introduced. For example, in 1954, the average nominal benefit was $208, which would have been equivalent to $1,740 in 2012 dollars. In recent decades, inflation has caused the real value of the $255 payment to continue to decline, as shown in Figure 1. Total spending on the benefit as a share of total Social Security benefits has declined even faster than the real value of the benefit, because monthly benefit payments are linked to national wage levels. In the 1960s, the lump-sum benefit accounted for more than 1% of Social Security benefit outlays, but that share has declined steadily, to only 0.03% in 2012. Under current law, the share will continue to decline as spending on the lump-sum death benefit remains generally constant but spending on other benefits continues to increase steadily. Figure 1. The Diminishing Significance of the Lump-Sum Death Benefit Source: CRS, based on Social Security, 2013 Statistical Supplement, Tables 6.D9 and 4.A5 Notes: Real value of the average benefit is shown in 2012 dollars, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration (SSA) estimated in 2006 that the annual administrative costs of the lump-sum death benefit were $15 million. That estimate has not been updated, but the costs are unlikely to have changed significantly. Proposals to Change or Eliminate the Lump-Sum Death Benefit Over the years, various proposals would have changed or eliminated the death benefit. In 1979, President Carter’s budget described it as “largely an anachronism” and proposed replacing it with a similar benefit that would be paid only if the deceased or the surviving spouse were eligible for Supplemental Security Income, a program that provides cash benefits to aged, blind, or disabled persons with limited income and assets. Under that proposal, only about 30,000 recipients would have received a benefit each year. The 1979 Advisory Council on Social Security recommended that the benefit be increased to three times the PIA, but no more than $500. The Council found that the benefit “provides valuable assistance at a time of special financial need. The monthly survivors’ benefits under social security are designed to meet regular recurring costs, while the lump-sum death payment is designed to meet the expenses of a final illness and funeral.” (In 1980, the average cost of a funeral was about $1,800; in 2012, it was about $7,000.) A significant minority of the Council favored the Carter proposal of targeting the benefit to those with the greatest need, but with a higher benefit of perhaps $625. President Bush’s 2006 budget proposed eliminating the benefit, arguing that it “no longer provides meaningful monetary benefit for survivors” and that it results in high administrative costs. The $15 million estimated administrative cost was about 7% of benefit outlays. Administrative costs for the entire Social Security program are less than 1% of benefit outlays. Some proposals would have increased the benefit. For example, in the 110th Congress, H.R. 341 proposed expanding eligibility for the benefit to insured workers upon the death of their uninsured spouses. In the 111th Congress, the Social Security Death Benefit Increase Act of 2010 (H.R. 6388) would have increased the benefit from $255 to $332, and the BASIC Act (H.R. 5001) would have increased it to 47% of the worker’s PIA. Author Contact Information Katelin P. Isaacs Analyst in Income Security [email protected], 7-7355

Jul 15, 2014

Qualifications of Members of Congress

This report discusses the qualifications required to hold the office of U.S. Senator or Representative to Congress that are established and set out within the U.S. Constitution.

Jul 10, 2014

Specialty Crop Provisions in the 2014 Farm Bill (P.L. 113-79)

U.S. farmers grow more than 350 types of fruit, vegetable, tree nut, flower, nursery, and other horticultural crops in addition to the major bulk commodity crops. Specialty crops, defined in statute as “fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops (including floriculture)” (P.L. 108-465; 7 U.S.C. §1621 note) comprise a major part of U.S. agriculture. In 2012, the value of farm-level specialty crop production totaled nearly $60 billion, representing about one-fourth of the value of U.S. crop production. The U.S. Department of Agriculture (USDA) reports that retail sales of fresh and processed fruits and vegetables for at-home consumption total nearly $100 billion annually. Exports of U.S. specialty crops totaled about $14 billion in 2013, or about 10% of total U.S. agricultural exports. Farm bill support specifically targeting specialty crops (and also certified organic agriculture) is relatively recent. Many programs supporting specialty crops were established in the Specialty Crops Competitiveness Act of 2004 (P.L. 108-465), which was enacted outside a farm bill year. Many of the programs in the 2004 act were further expanded and reauthorized in the 2008 farm bill (Food, Conservation, and Energy Act of 2008, P.L. 110-246). Some other programs were established in the 2002 farm bill (Farm Security and Rural Investment Act of 2002, P.L. 107-171), often as pilot initiatives that have since become established programs. In addition, some programs supporting specialty crops and organic agriculture are long-standing farm support programs that benefit all agricultural producers and are regularly contained within omnibus farm legislation. These include marketing and promotion programs, crop insurance and disaster assistance, plant pest and disease protections, trade assistance, nutrition programs, and research and extension services, among other types of program support. The 2014 farm bill (Agricultural Act of 2014, P.L. 113-79) reauthorized and expanded many of the existing farm bill provisions designed to support the specialty crop and certified organic sectors. The 2014 farm bill also provided additional program funding in some cases. Many provisions in Title X (“Horticulture”) of the farm bill fall into the categories of marketing and promotion; data and information collection; pest and disease control; food safety and quality standards; and support for local foods. Title X also includes provisions benefitting certified organic agriculture producers, including USDA’s National Organic Program. However, provisions supporting the specialty crop and certified organic sectors are not limited to Title X, but are also contained within several other titles of the farm bill, including the research, nutrition, and trade titles. An important source of support for the specialty crop industry includes fruit and vegetable purchases under USDA’s domestic nutrition assistance programs. Despite this wide range of program support, overall program spending for specialty crops and organic agriculture still accounts for a small share of estimated total farm bill spending and remains lower than spending levels for program commodity crops (such as corn, soybeans, grains, dairy, and other farm commodities). Total mandatory spending for specialty crops and organic agriculture under the 2014 farm bill is expected to average about $773 million annually (FY2014-FY2018). In addition, individual specialty crop and organic producers generally do not directly benefit from the same types of federal commodity price and income support programs that benefit producers of commodity crops. Other federal agencies also play important roles in the specialty crop industry—either indirectly supporting or overseeing the industry—but are not addressed in this report. For information, see CRS Report R42771, Fruits, Vegetables, and Other Specialty Crops: Selected Farm Bill and Federal Programs.

Jul 10, 2014

Monetary Policy and the Taylor Rule

Jul 9, 2014

The Individuals with Disabilities Education Act (IDEA), Part C: Early Intervention for Infants and Toddlers with Disabilities

The Individuals with Disabilities Education Act (IDEA) is both a statute that authorizes grant programs and a civil rights statute. The grant programs authorized under the IDEA provide federal funding for special education and early intervention services for children with disabilities (birth to 21 years old) and require, as a condition for the receipt of such funds, the provision of a free appropriate public education (FAPE) (i.e., specially designed instruction provided at no cost to parents that meets the needs of a child with a disability) and an accessible early intervention system (a statewide system to provide and coordinate early intervention services for infants and toddlers with disabilities and their families). As a civil rights statute, the IDEA contains procedural safeguards, which are provisions intended to protect the rights of parents and children with disabilities regarding the provision of special education and early intervention services. These procedures include parental rights to resolve disputes through a mediation process, and present and resolve complaints through a due process complaint procedure, and through state complaint procedures. Originally enacted in 1975, the IDEA has been the subject of numerous reauthorizations to extend services and rights to children with disabilities. The most recent reauthorization of the IDEA was P.L. 108-446, enacted in 2004. Funding for Part B of the IDEA, Assistance for Education of all Children with Disabilities, the largest part of the act, is permanently authorized. Funding for Part C, Infants and Toddlers with Disabilities, and Part D, National Activities, was authorized through FY2011. Funding for Part C and Part D programs continues to be authorized through annual appropriations. Part C of the IDEA authorizes a grant program to aid each state in implementing a system of early intervention services for infants and toddlers with disabilities and their families. In 2012, over 335,000 infants and toddlers between birth and three years old received early intervention services under Part C of the IDEA. Annual funding to each state for Part C programs is based upon census figures of the number of children, birth through two years old, in the general population. In FY2014, $12.3 billion was appropriated for the IDEA, $438.5 million of which was appropriated for Part C, representing 3.6% of total IDEA funding. Part C requires each state to implement a public awareness program and Child Find activities to identify infants and toddlers who may be eligible for early intervention services. To be eligible for early intervention services under Part C of the IDEA, an infant or toddler must meet his or her state’s definition of an infant or toddler with a disability or developmental delay. Once a child meets the IDEA’s eligibility criteria, the early intervention system provides an assessment of the needs of both the child and the child’s family. Early intervention coordinators then either help the family coordinate services for their child through outside service providers or directly provide early intervention services to the child and the child’s family, depending on the design of the early intervention system in the state. Before a child receiving Part C services turns three years old, the child is assessed to determine whether he or she will continue receiving IDEA services, and, if so, whether the child will remain in an extended Part C service arrangement or transition into a special education preschool program funded by Section 619 of Part B of the IDEA.

Jul 9, 2014

Unaccompanied Alien Children: Potential Factors Contributing to Recent Immigration

Since FY2008, the growth in the number of unaccompanied alien children (UAC) from Mexico, El Salvador, Guatemala, and Honduras seeking to enter the United States has increased substantially. Total unaccompanied child apprehensions increased from about 8,000 in FY2008 to 52,000 in the first 8 ½ months of FY2014. Since 2012, children from El Salvador, Guatemala, and Honduras (Central America’s “northern triangle”) account for almost all of this increase. Apprehension trends for these three countries are similar and diverge sharply from those for Mexican children. Unaccompanied child migrants’ motives for migrating to the United States are often multifaceted and difficult to measure analytically. Four recent out-migration-related factors distinguishing northern triangle Central American countries are high violent crime rates, poor economic conditions fueled by relatively low economic growth rates, high rates of poverty, and the presence of transnational gangs. In 2012, the homicide rate per 100,000 inhabitants stood at 90.4 in Honduras (the highest in the world), 41.2 in El Salvador, and 39.9 in Guatemala. International Monetary Fund reports show economic growth rates in the northern triangle countries in 2013 ranging from 1.6% to 3.5%, relatively low compared with other Central American countries. About 45% of Salvadorans, 55% of Guatemalans, and 67% of Hondurans live in poverty. Surveys in 2013 indicate that almost half of all unaccompanied children experienced serious harm or threats by organized criminal groups or state actors, and one-fifth experienced domestic abuse. In 2011, Mexico passed legislation to improve migration management and ensure the rights of migrants transiting the country. According to many migration experts, implementation of the laws has been uneven. Some have questioned whether passage of such legislation has affected in some way the recent flows of unaccompanied children. However, the impact of such laws remains unclear. Although economic opportunity may motivate some unaccompanied children to migrate to the United States, labor market conditions for low-skilled minority youth have worsened in recent years, even as industrial sectors employing low-skilled workers enjoy improved economic prospects. Educational opportunities may also provide a motivating factor to migration as perceptions of free and safe education may be widespread among the young. Family reunification is reported to be one of the key motives of unaccompanied children. Many have family members among the sizable Salvadoran, Guatemalan, and Honduran foreign-born populations residing in the United States. While the impacts of actual and perceived U.S. immigration policies have been widely debated, it remains unclear if, and how, specific immigration policies have motivated children to migrate to the United States. Misperceptions about U.S. policies may be a contributing factor. The existence of long-standing humanitarian relief policies confounds causal links between them and the recent surge in unaccompanied children. A notable and recent exception is revised humanitarian relief provisions for unaccompanied children included in the Trafficking Victims Protection Reauthorization Act (TVPRA) of 2008, which affects asylum claims, trafficking victim protections, and eligibility for Special Immigrant Juvenile Status. Some argue that unaccompanied children and their families falsely believe they would be covered under the Deferred Action for Childhood Arrivals (DACA) initiative and legalization provisions in proposed comprehensive immigration reform (CIR) legislation. A separate report, CRS Report R43599, Unaccompanied Alien Children: An Overview, by Lisa Seghetti, Alison Siskin, and Ruth Ellen Wasem, discusses the recent surge in the number of UACs encountered at the U.S. border with Mexico, as well as the processing and treatment of UACs who are apprehended by immigration officials. Another report provides answers to frequently asked questions, CRS Report R43623, Unaccompanied Alien Children—Legal Issues: Answers to Frequently Asked Questions, by Kate M. Manuel and Michael John Garcia. For information on country conditions, security conditions, U.S. policy in Central America, and circumstances that may be contributing to the increase in unaccompanied alien children migrating to the United States, see CRS Report RL34112, Gangs in Central America, by Clare Ribando Seelke; CRS Report R41731, Central America Regional Security Initiative: Background and Policy Issues for Congress, by Peter J. Meyer and Clare Ribando Seelke; CRS Report R43616, El Salvador: Background and U.S. Relations, by Clare Ribando Seelke; CRS Report R42580, Guatemala: Political, Security, and Socio-Economic Conditions and U.S. Relations, by Maureen Taft-Morales; and CRS Report RL34027, Honduras: Background and U.S. Relations, by Peter J. Meyer.

Jul 3, 2014

The Voting Rights Act of 1965: Background and Overview

This report provides background information on the historical circumstances that led to the adoption of the Voting Rights Act (VRA), a summary of its major provisions, and a brief discussion of the U.S. Supreme Court decision and related legislation in the 113th Congress.

Jul 1, 2014

C-130 Hercules: Background, Sustainment, Modernization, Issues for Congress

The United States primary tactical airlift aircraft is the C-130. Nicknamed the Hercules, this venerable aircraft has been the workhorse of U.S. tactical airlift for the past 57 years. The majority of C-130s in the U.S. government are assigned to the U.S. Air Force, but the U.S. Navy, Marine Corps, and Coast Guard also operate sizeable C-130 fleets. The potential concerns for Congress include oversight of and appropriations for an aging C-130 fleet. As the C-130 fleet ages, management issues arise with reduced reliability, obsolescence and reduced parts availability, and changing aviation rules that impact the C-130’s ability to operate worldwide. The C-130 program recently passed a major milestone; the FY2013 NDAA authorized the Secretary of the Air Force to enter into one or more multi-year contracts for the procurement of C-130J aircraft for the Department of the Air Force and the Department of the Navy. This was a significant step toward recapitalizing a portion of the fleet. As Congress decides the future of the tactical airlift fleet, a significant decision is whether or not to continue recapitalizing the fleet with new aircraft. This issue is fueled by several factors, including aircraft life cycles, cost, basing strategy, strategic guidance, the industrial base, and the desired capabilities mix. With these factors in mind, the services have committed to recapitalize a large portion of the C-130 fleet. However, at current production rates, there will still be aircraft in the fleet much older than the crews that fly them well into the future. A common strategy to extend the life of an aircraft fleet is to modernize the current airframes with new components. This strategy attempts to combat issues that plague an aging fleet such as diminishing reliability, antiquated avionics, and capabilities that no longer meet current requirements. The cost of modernization is commonly the driving factor behind these efforts. Analyzing the return on investment of modernizing components on aging aircraft versus recapitalizing the fleet to gain new capabilities will inform these decisions. Congress is currently faced with deciding the future of several modernization efforts being considered for the C-130 fleet. Circumstances that arise due to the changing nature of the global environment may drive decisions by Congress to reduce the size of the fleet by divesting some aircraft. With the current drawdown of U.S. military forces, perhaps the desired future capability can be met with fewer aircraft. Divesting aircraft from a fleet involves a detailed analysis of the capabilities that remain in the desired end-state fleet. Ideally, the required capabilities to meet strategic guidance still reside within the system as a whole when aircraft are retired. The mix of Active and Reserve forces that remain after drawing down a fleet may also be a significant concern. This mix of Active, Guard, and Reserve forces may also lead to decisions regarding force structure. Adjustments to force structure within the Guard and Reserve have been a contentious issue in the past and will require congressional oversight and approval.

Jun 24, 2014

Social Security: Minimum Benefits

Congressional Research Service 7-5700 www.crs.gov R43615 Summary Social Security’s minimum benefit provision, the Special Minimum Primary Insurance Amount (PIA), is an alternative benefit formula that increases benefits paid to workers who had low earnings for many years and to their dependents and survivors. The Special Minimum PIA is based on the number of years a person has worked, whereas the standard benefit formula is based on a worker’s average lifetime earnings. The worker receives the higher of the two benefits. However, the Special Minimum PIA has virtually no effect on the benefits paid to today’s new retirees. Under current law, it grows with price levels, whereas the standard benefit is linked to wages. Because wages generally grow faster than prices, the Special Minimum PIA affects fewer beneficiaries every year. In 2013, about one out of every 1,500 Social Security recipients qualified for the minimum benefit, and the provision resulted in only about $20 million of the more than $800 billion in Social Security benefit outlays. The Social Security Administration (SSA) estimates that provision will have no effect on workers turning 62 in 2019 or later. Social Security has had a minimum benefit provision since 1939. Originally, the minimum benefit was a fixed-dollar amount. Congress created the Special Minimum PIA in 1972 in response to concerns that the fixed-dollar minimum provided a windfall to people who had worked only a few years in Social Security-covered employment. The Special Minimum PIA may be paid to workers with more than 10 years in Social Security-covered employment. The Special Minimum benefit amount paid to a retired worker is based on, and rises with, the number of years worked in covered employment. Some recent proposals would reinstitute a minimum benefit. This renewed interest has been sparked by Social Security proposals that would reduce the regular benefit and by concern over poverty rates among beneficiaries who had low wages throughout their careers. Increases in Social Security benefits targeted at people with greater need could be implemented in various ways. For example, a new minimum benefit provision could be introduced, the standard benefit could be increased for people who worked for many years at low earnings, or a fixed dollar-benefit could be introduced. Similar provisions could also be introduced through other programs, such as Supplemental Security Income (SSI). Contents Introduction 1 Determining Regular Social Security Retirement Benefits 1 Determining the Special Minimum PIA Benefit Amount 1 Years of Coverage 2 Special Minimum PIA Initial Monthly Benefit Amounts 2 Benefits for Family Members 4 Potential Adjustments to the Special Minimum PIA Benefit Amount 4 Dually Entitled Beneficiaries 5 The Special Minimum PIA Has Little Effect on Current Beneficiaries 5 History of the Social Security Minimum Benefit Provision 6 Original Structure of the Social Security Minimum Benefit (1939 to 1981) 6 The Special Minimum PIA (1973 to the Present) 7 Arguments For and Against a Minimum Benefit Provision 8 Arguments for a Minimum Benefit Provision 8 Arguments for Phasing Out the Social Security Minimum Benefit 9 Criteria for Evaluating Minimum Benefit Proposals 9 To What Extent Does the Benefit Reduce Poverty? 9 Should the Benefit Grow with Prices or Wages? 10 What Years of Coverage Requirements Should a Minimum Benefit Have? 10 Interactions Between Social Security Minimum Benefits and Supplemental Security Income 11 Other Considerations 12 Minimum Benefit Options and Estimated Effects 12 Options Based on Number of Years of Work 13 Options to Enhance the Standard Social Security Benefit 14 A Fixed-Dollar Benefit 14 Alternative Strategies for Addressing Poverty Among Long-Term Low-Wage Workers 15 Tables Table 1. Special Minimum PIA Monthly Benefit Amounts, 2014 3 Table 2. Number of Special Minimum PIA Beneficiaries and Average Increase in Monthly Benefit, June 2013 5 Contacts Author Contact Information 16 Introduction Social Security’s minimum benefit provision, the Special Minimum Primary Insurance Amount (PIA), is an alternative benefit formula that increases benefits paid to workers who had low earnings for many years and to their dependents and survivors. Unlike the standard Social Security benefit formula, which is based on a worker’s average lifetime earnings, the Special Minimum PIA is based on the number of years a person has worked. This paper explains how the Special Minimum PIA functions under current law and presents arguments for and against expanding it. It then discusses criteria for evaluating proposals for change and describes some specific options for increasing benefits paid to people with low earnings or low income. Determining Regular Social Security Retirement Benefits To compute the regular Social Security retirement benefit (known as the regular “primary insurance amount,” or PIA), a worker’s highest 35 years of earnings are converted into current-dollar terms by indexing each year of earnings to historical wage growth. The highest 35 years of indexed earnings are divided by 35 to determine career-average annual earnings and then divided by 12 to determine the worker’s average indexed monthly earnings (AIME). If a worker has fewer than 35 years of earnings in covered employment, years of no earnings are entered as zeros. Next, the standard Social Security benefit formula is applied to the worker’s AIME. Two dollar thresholds, known as “bendpoints,” are used to divide the worker’s AIME into three segments; in 2014, the two bendpoints are $816 and $4,917. Next, three factors—90%, 32%, and 15%—are applied to the three different segments of the worker’s AIME to compute the basic monthly benefit. Because the lower factors apply to people with higher earnings, the benefit formula is progressive. That is, it replaces a higher percentage of the pre-retirement earnings of workers with low career-average earnings than for workers with high career-average earnings. For details, see CRS Report R43542, How Social Security Benefits Are Computed: In Brief, by Noah P. Meyerson. Social Security also provides auxiliary benefits to eligible family members of a retired, disabled, or deceased worker. Benefits payable to family members are equal to a specified percentage of the worker’s PIA. For example, a spouse’s benefit is equal to 50% of the worker’s PIA and a widow(er)’s benefit is equal to 100% of the deceased worker’s PIA. For more information on auxiliary benefits, see “Benefits for the Worker’s Family Members” in CRS Report R42035, Social Security Primer, by Dawn Nuschler. Determining the Special Minimum PIA Benefit Amount Unlike the regular benefit, the Special Minimum PIA benefit is based only on the number of years spent in Social Security-covered employment. Beneficiaries receive the higher of the two amounts. Years of Coverage A “year of coverage” for the purposes of computing the Special Minimum PIA is a year during which the worker earns more than a specified threshold. Since 1991, the annual threshold for a year of coverage under the Special Minimum PIA has equaled 15% of the “old law” contribution and benefit base. The “old law” contribution and benefit base is indexed to increases in the national average wage. As a result, year of coverage thresholds for the Special Minimum PIA are effectively indexed to wage growth. The 2014 threshold is $13,050. The year of coverage thresholds create a “cliff” effect. If a worker’s earnings in a year are even one dollar short of the threshold for that year, a year of coverage is not credited. Special Minimum PIA Initial Monthly Benefit Amounts The Special Minimum PIA depends only on a worker’s years of coverage. A worker must have at least 11 years of coverage to be eligible for the benefit. For those with 11 years, the Special Minimum PIA monthly benefit is $39.30. It increases by about $41 for each additional year of coverage (see Table 1). (For each additional year of coverage, the actual increase in the PIA is not exactly $41 because of the cumulative impact of annual rounding.) For example a person with 30 years of coverage would qualify for an initial monthly Special Minimum PIA benefit of $804.00 (before potential adjustments, as will be discussed below). Table 1. Special Minimum PIA Monthly Benefit Amounts, 2014 Number of Years of Coverage Monthly Primary Insurance Amount 11 $59.80 12 80.20 13 121.20 14 161.90 15 202.40 16 243.60 17 284.40 18 325.30 19 366.10 20 407.10 21 448.00 22 488.60 23 530.10 24 570.90 25 611.50 26 653.00 27 693.40 28 734.30 29 775.20 30 816.00 Source: Social Security Administration, http://www.socialsecurity.gov/cgi-bin/smt.cgi. The Special Minimum PIA benefit amounts are indexed to price inflation, in contrast to regular Social Security benefits, which are indexed to wage inflation. Wages generally grow faster than prices, so regular benefits have grown faster than Special Minimum PIA benefits. As a result, a worker’s regular benefit is now almost always higher than the Special Minimum PIA benefit. After the initial year of benefit receipt, the same Social Security cost-of-living-adjustment (COLA) applies to both the Special Minimum PIA benefit and regular benefits. Benefits for Family Members Monthly benefit rates for dependents and survivors are figured as a percentage of the worker’s Special Minimum PIA, not to exceed the family maximum amount (described below). The computation of auxiliary benefits uses the same rates that are used for regular benefits. For details, see “Benefits for the Worker’s Family Members” in CRS Report R42035, Social Security Primer, by Dawn Nuschler. Potential Adjustments to the Special Minimum PIA Benefit Amount Various provisions may cause a worker’s monthly benefit payment to differ from the PIA. Some of the provisions apply to both the regular PIA and the Special Minimum PIA, and some adjustments differ. Four provisions affect both the regular benefit and the Special Minimum benefit: Actuarial benefit reduction. The provision reduces monthly benefits below the PIA for people who claim benefits before the full retirement age (FRA). Retirement earnings test (RET). The RET reduces current benefits for beneficiaries who are younger than the FRA and have earnings that exceed a specified dollar amount. Government pension offset (GPO). The GPO reduces benefits for people who have pensions from employment that is not covered by Social Security, but who are entitled to Social Security spouse or survivor benefits based on a spouse or deceased spouse’s work record in Social Security-covered employment. Family maximum benefit. The maximum total benefit that can be received by all members of a family varies from 150% to 188% of the retired or deceased worker’s PIA, even if the sum of the benefits for the individuals in the family would be greater. Two provisions affect regular benefits but do not affect Special Minimum benefits: Delayed retirement credit (DRC). The DRC increases regular benefits for workers who start receiving benefits after reaching the FRA. It does not apply to Special Minimum benefits. Windfall elimination provision (WEP). A regular benefit may be reduced under the WEP if the worker is entitled to a pension based on employment in certain federal, state, or local government positions that are not covered by Social Security. It does not apply to Special Minimum benefits. Dually Entitled Beneficiaries Some beneficiaries are entitled to Social Security benefits based both on their own work and on a spouse’s work. When a beneficiary’s retired-worker benefit is higher than the spousal or survivor benefit, the beneficiary receives only the retired-worker benefit. But when the beneficiary’s retired-worker benefit is lower than the spousal or survivor benefit, the person is referred to as “dually entitled” and receives a payment equal to the spousal or survivor benefit. (Technically, the payment consists of the retired-worker benefit plus the difference between the retired-worker benefit and the full spousal or survivor benefit.) Many workers—primarily women—who qualify for the Special Minimum PIA based on their own work are dually entitled and receive a benefit amount that is equal to the higher spouse or survivor benefit. Therefore, although they technically receive the Special Minimum benefit, the provision has no effect on their benefits. The Special Minimum PIA Has Little Effect on Current Beneficiaries The Special Minimum PIA has only a minimal effect on current benefits, because the standard benefit is almost always greater than the special minimum benefit. Only about 35,000 of the 54 million Social Security beneficiaries were affected by the Special Minimum PIA in June 2013, and it increased their average benefit by just $46 per month (see Table 2). That is, the special minimum benefit was, on average, $46 larger than the standard benefit those beneficiaries were entitled to. SSA projects that the provision will have no effect on people turning 62 in 2019 or later. Almost 75% of the affected beneficiaries were workers, and about 20% were widows. Spouses and child beneficiaries accounted for the remainder. Most workers who qualify for the special minimum PIA are women. Table 2. Number of Special Minimum PIA Beneficiaries and Average Increase in Monthly Benefit, June 2013 Beneficiary Type Number of Beneficiaries Average Monthly Benefit Increase Worker 25,333 $51.28 Spouse 1,526 25.04 Child 1,199 29.67 Widow 6,673 36.03 All Beneficiaries 34,731 46.45 Source: Craig A. Feinstein, Diminishing Effect of the Special Minimum PIA, Social Security Administration, Actuarial Note No. 154, November 2013, Table 3. Since 1999, the provision has benefited only newly entitled beneficiaries whose regular benefit is subject to the WEP. As explained above, the WEP can reduce regular benefits but does not reduce Special Minimum benefits. The Special Minimum helps only individuals whose regular benefit (reduced by the WEP) is less than the Special Minimum benefit (not reduced by the WEP). History of the Social Security Minimum Benefit Provision Original Structure of the Social Security Minimum Benefit (1939 to 1981) Congress first created a Social Security Minimum Benefit provision in 1939, when it established a Minimum Benefit of $10 per month. (At the time, $10 was the lowest monthly benefit amount payable under the benefit calculations used that year.) From 1939 to 1981, the Minimum Benefit provided a minimum benefit to anyone with low average earnings in Social Security-covered employment. Unlike the current Special Minimum PIA, the law did not require any number of years of work or any level of earnings. The Minimum Benefit applied both to people with long careers with low annual earnings and to people with shorter careers with higher annual earnings. Successive legislation periodically raised the original $10 monthly dollar amount in increments until 1975, when Minimum Benefit amounts for newly entitled beneficiaries were tied to increases in the consumer price index. Also starting in 1975, a cost-of-living adjustment (COLA) was provided for Minimum Benefits following the initial year of benefit entitlement. The Social Security Financing Amendments of 1977 (P.L. 95-216) fixed the initial Minimum Benefit at the amount in effect in December 1978—$122 per month—for beneficiaries newly entitled in January 1979 or later. Annual COLAs continued to be provided to beneficiaries following the first year of benefit receipt. The House Ways and Means Committee Report to accompany the bill to freeze the benefit (H.R. 9346, which became P.L. 95-216) contained this rationale: Increasingly, the minimum benefit is being paid to people who did not, during their working years, rely on their covered earnings as a primary source of support. Such people include, for example, workers whose primary work was in non-covered employment subject to a staff retirement system—such as Federal civilian employees. In December 1975, about 45% of civil service retirement annuitants were receiving Social Security benefits, more than a quarter of whom were receiving the minimum.... Because of the characteristics of people getting the minimum, it has been characterized as being a windfall’ to people who have not worked regularly under the program. The Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35) eliminated the original Minimum Benefit structure for all current and future beneficiaries effective January 1, 1982. The bill was enacted into law on August 13, 1981, but public outcry led to reconsideration. Subsequently, in December 1981, Congress passed legislation to restore the original Minimum Benefit structure for people who became eligible for Social Security benefits before January 1, 1982. That law eliminated the original Minimum Benefit structure for all beneficiaries who attained the age of 62, became disabled, or were eligible for survivor benefits based on the death of a family member after December 1981. The Special Minimum PIA (1973 to the Present) The Special Minimum PIA was enacted in 1972 at the same time as the Supplemental Security Income (SSI) program and was designed to help reduce dependence on SSI by people who worked in Social Security-covered employment for many years. The provision took effect in January 1973. The Special Minimum PIA operated alongside the original Minimum Benefit until the end of 1981, when the latter was phased out. When both provisions were in effect, beneficiaries received the higher of the benefits. Unlike the original Minimum Benefit, the Special Minimum PIA did not help people who had paid Social Security payroll taxes for only a few years. Special Minimum PIA initial benefits were indexed to price inflation in 1977. In contrast, the thresholds for determining a year of coverage under the Special Minimum PIA are indexed to growth in national average wages, which historically have risen faster than prices. For a detailed legislative history of the Special Minimum PIA, see Kelly A. Olsen and Don Hoffmeyer, “Social Security’s Minimum Benefit,” Social Security Bulletin, vol. 64, no. 2 (2001/2002), pp.4-6, at http://www.ssa.gov/policy/docs/ssb/v64n2/v64n2p1.pdf. Arguments For and Against a Minimum Benefit Provision Arguments for a Minimum Benefit Provision With the effective elimination of the Special Minimum PIA, many policy makers and analysts have suggested creating a new minimum benefit. A minimum benefit within Social Security could be a suitable way to reward long-term, low-wage work without subjecting beneficiaries to means testing, which is often cumbersome to administer and which may make beneficiaries feel stigmatized. Some argue that a minimum benefit remains necessary because many elderly Social Security beneficiaries, especially elderly women, are poor or near poor. In 2012, about 7% of Social Security beneficiaries aged 65 or older had family incomes below the poverty threshold and about 13% of beneficiaries aged 65 or older had family incomes below 125% of the poverty threshold. (The comparable figures for non-beneficiaries are 20% and 24%, respectively.) About 9% of female beneficiaries aged 65 or over had family incomes below the poverty line, compared with about 4% of male beneficiaries in this age group. Some research suggests restructuring the Social Security minimum could be more effective in alleviating poverty than certain reforms to the SSI program, although a combination of both programs could be useful in the event that Social Security benefits are greatly reduced in the future. Some view minimum benefits as a way to reward long-term, low-wage work with a Social Security benefit that is at or above the poverty threshold. Restructuring the Social Security minimum benefit to provide a benefit at or above the poverty threshold (e.g., 120% of the poverty threshold) for long-term workers would more generously reward long-term participation in the workforce. Others view a restructuring of minimum benefits as potentially helpful in the context of legislation that reduces Social Security benefits or exposes them to market risk. Several recent proposals that would reduce regular Social Security benefits have included minimum benefit guarantees. A minimum benefit could be designed to reduce poverty rates among older beneficiaries more efficiently than existing Social Security spousal and survivor benefits. This is partly because a redesigned minimum benefit could reach women who do not qualify for Social Security spouse or survivor benefits because they never married or because they divorced before reaching 10 years of marriage. Because of changing marriage and work patterns, the number of women eligible for spousal and survivors benefits is declining, making this a more important consideration. Arguments for Phasing Out the Social Security Minimum Benefit One argument for allowing the Special Minimum PIA to phase out is that minimum benefits cannot be accurately targeted to the working poor. Because SSA does not collect information on earnings per hour or on the number of hours worked, it is impossible to distinguish between people who had low annual earnings because they worked few hours at higher wages and those who worked many hours at lower wages. People with high annual but low lifetime earnings may be seen as having chosen their low earnings by working less than others. Another argument is that means-tested programs, such as SSI, are a more appropriate way to supplement the incomes of people with very low incomes and assets. Means testing can help target transfers to those who are in greatest financial need. Some research suggests, however, that means testing can harm incentives for work and saving because SSI’s asset limits are currently quite low. Another consideration is that Social Security is available to retired workers earlier than SSI. Retired workers can claim Social Security benefits starting at the age of 62 while SSI is available to aged beneficiaries starting at age 65. Finally, SSI is generally insufficient to move recipients above the federal poverty level. Criteria for Evaluating Minimum Benefit Proposals There are a number of possible criteria to consider when evaluating proposals for a minimum benefit. To What Extent Does the Benefit Reduce Poverty? One possible goal of a minimum benefit would be to reduce poverty. The Special Minimum PIA was not linked to poverty, and many people who receive it still have family income below the federal poverty threshold. The maximum benefit for people entitled in 2014 is $816 a month, or $9,792 a year, which is below the federal poverty guideline for a single person of $11,670. Proposed minimum benefit levels are often expressed as a percent of the federal poverty guidelines or as a percentage of a new poverty measure that is in line with the recommendations of the National Academy of Sciences. Should the Benefit Grow with Prices or Wages? In addition to setting a benefit level when a minimum benefit was first implemented, policy makers would have to decide how a minimum benefit would grow each year. As noted above, the effect of the Special Minimum PIA has essentially ended because it is linked to prices and regular Social Security benefits are linked to wages, which generally grow faster than prices. If the goal of a minimum benefit were to ensure a certain purchasing power, it could be indexed to prices. Under current law, the maximum SSI monthly benefit—which now effectively functions as the minimum benefit for most Social Security beneficiaries—grows with prices. However, if the goal of a minimum benefit were to provide beneficiaries with an income that grew at about the same rate as workers’ income, it could be linked to wage levels. What Years of Coverage Requirements Should a Minimum Benefit Have? To target the benefit at people with many years of work, many proposals would link minimum benefit levels to the number of years a person has worked in Social Security-covered employment. Many recent minimum benefit proposals would require that the worker have 30 years of Social Security-covered earnings to qualify for the full minimum benefit. These work tenure requirements are intended to reward long-time attachment to the workforce. A number of proposals would also provide a lower minimum benefit for people with 10 or 20 years of covered earnings. Lowering the required number of years of coverage would allow the minimum benefit to reach more workers, including more part-time and part-year workers. Women are more likely than men to work few years. Lowering the required number of years of coverage could, however, arguably, result in inadequate benefits for people with years of coverage at the lower bound of 10 or 20 years. A lower years-of-coverage requirement also raises questions about work incentives. Finally, in conjunction with a lower years-of-coverage requirement, the Windfall Elimination Provision or a similar policy could be applied to the minimum benefit provision to prevent a windfall to people with pensions from non-covered employment. Some have suggested counting quarters of coverage, instead of years of coverage as under the Special Minimum PIA, to make it easier for workers to qualify for the minimum benefit or to reach higher benefit levels. (Eligibility for regular benefits is based in part on a worker’s quarters of coverage. Workers earn up to four quarters of coverage. In 2014, each $1,200 earns one quarter of coverage; the dollar amount grows each year with average wages.) A variation on this type of reform would be to count partial years of coverage (i.e., if a person earned 50% of the coverage threshold, they would accrue half a year of coverage). One study looked at combining a quarterly coverage threshold with lowering the dollar amount of the coverage threshold (on an annualized basis). The study found that this reform would reach more workers than allowing partial years of coverage. Another possible reform would be to extend the years of coverage included for benefit determination beyond the current 30 years, for example to 35 or 40 years. This type of reform would reward additional years of work. Implemented together with wage indexation of the minimum benefit, this reform would slightly increase the share of benefits going to people with the most (35 or more) work years compared with current law. Interactions Between Social Security Minimum Benefits and Supplemental Security Income If the Social Security minimum benefit is redesigned to be more generous or reach more people, it would be necessary to address interactions between Social Security benefits and eligibility for other programs targeted at low-income individuals, most importantly the SSI. There would also be interactions with Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and the Low Income Home Energy Assistance Program (LIHEAP). SSI is available to people with low incomes and very limited resources. If a Social Security beneficiary also receives SSI, there is often no advantage to an increase in Social Security benefits, because SSI benefits will be reduced by an equal amount. Specifically, a person’s “countable” income is subtracted from the total of the SSI federal benefit rate ($721 per month in 2014 for an individual living independently) plus any state supplement. Countable income equals all unearned income, including Social Security benefits, in excess of $20. If a Social Security benefit is increased above the SSI federal benefit rate, affected beneficiaries’ total income will increase, but they may be at risk of losing Medicaid eligibility. If countable income exceeds the base SSI benefit, then SSI eligibility is suspended. After 12 consecutive months of suspension, the person is formally terminated from the SSI program. If a person loses SSI eligibility, he or she may, depending on the state, also lose Medicaid eligibility. Section 1619(b) of the Social Security Act protects Medicaid eligibility for people who lose their SSI eligibility due to earned income only. There is no protection for those who lose eligibility based on unearned income, such as Social Security benefits. Some analysts have proposed that people who become ineligible for SSI due to an increased special minimum benefit remain eligible for Medicaid. Another possible remedy would be to increase the dollar amount of the Social Security benefit that is disregarded in determining SSI eligibility. Other Considerations Some proposals would combine a years-of-coverage requirement with credits for a limited number of years of care-giving, unemployment, or poor health in the definition of a “year of coverage.” Providing those credits would require documentation of qualifying activities, which could increase Social Security’s administrative costs. Another important consideration is how disabled workers would be affected. Under Social Security Disability Insurance (SSDI) program rules, eligible disabled workers may receive benefits based on shorter work histories than retired workers; minimum benefit proposals could also treat disabled beneficiaries differently. Minimum benefit proposals are often structured to avoid conferring windfalls on people without a strong attachment to Social Security-covered employment. Such people may include recent immigrants or people who worked most of their careers in non-covered state or local government employment. Another question is whether spouses would be entitled to auxiliary benefits based on a worker’s minimum benefit. If policy makers wished to allow that but wanted to limit outlays, a limit could be placed on the couple’s total benefit. Minimum Benefit Options and Estimated Effects There have been numerous proposals for minimum benefits. Most fall into three categories: A benefit based on the number of years of work, similar to the Special Minimum PIA, A percentage increase in the regular benefit based on the number of years of work, or A fixed-dollar amount. SSA’s Office of the Chief Actuary, the Congressional Budget Office (CBO), and SSA’s Office of Retirement Policy have all published detailed analyses of the effects of various minimum benefit options. Options Based on Number of Years of Work One approach would be to reconfigure the Special Minimum PIA. Like the Special Minimum, the benefit would be based on the computed number of years of work, which would be defined as taxable earnings above a threshold. A beneficiary would receive the minimum benefit if it was higher than the standard benefit. For example, the National Academy of Social Insurance developed an option that would provide beneficiaries who worked for 30 years with a benefit equivalent to 125% of the poverty line. A year of work was defined as earning four quarters of coverage. The minimum benefit would phase down proportionally for workers with less than 30 years but more than 10 years of earnings. SSA’s Office of the Chief Actuary estimated that when fully phased in, this provision would increase total benefits by almost 2%. (A variation of this option would count up to eight years of care for children under the age of 5 as years of coverage and would increase total benefits by slightly more than 2%.) SSA’s Office of Retirement Policy found that in 2050, the option (without an adjustment for childcare years) would increase benefits for 16% of beneficiaries and for a third of the poorest fifth of beneficiaries. Of those affected, about 40% would have their benefit increase by more than a fifth. Similar provisions to reconfigure the Special Minimum PIA were included in proposals developed by the Commission on Fiscal Responsibility and Reform and the (Rivlin-Domenici) Debt Reduction Task Force. The Fiscal Commission proposed redefining a year of coverage as a year in which four quarters of coverage are earned and setting the minimum PIA for workers with 30 years of coverage equal to 125% of the monthly poverty level. That benefit level would have been indexed to prices for eight years and then to wages. The Rivlin-Domenici task force proposed defining a year of coverage as a year in which a worker either earned 20% of the old law maximum or had a child in care, setting the minimum PIA for 30 years of coverage equal to 133% of the poverty level, indexing benefits to wages, and limiting benefits to workers with more than

Jun 23, 2014

El Salvador: Background and U.S. Relations

This report examines current conditions in El Salvador as well as issues in U.S.-Salvadoran relations.

Jun 23, 2014

Aliens' Right to Counsel in Removal Proceedings: In Brief

This report provides an overview of the various legal authorities governing aliens' right to counsel--as that term is broadly understood--in removal proceedings.

Jun 20, 2014

Iraq Crisis and U.S. Policy

This report analyzes the offensive in northern and central Iraq led by the Islamic State of Iraq and the Levant (ISIL, aka ISIS) -- a Sunni Islamist insurgent and terrorist group -- with a discussion of the offensive's implications, the U.S. response, and related issues.

Jun 20, 2014