The Cronyism Grown Into U.S. Food Aid

America is a generous country. Taxpayers can take pride in the fact that, under the terms of the 2014 Farm Bill, they will send more than $2 billion worth of food to needy countries this year. Thanks to these aid programs, more than 50 million people in 51 countries will be fed by U.S. foreign aid. That’s the good news.

The bad news is that these programs are rife with cronyism that make them more expensive and less effective than they should be.

Just how much cronyism is there? Enough that another 8 to 10 million people could be fed at no added cost just by removing two unnecessary regulations.

What do these regulations do? The first requires that nearly all U.S. food aid be sourced from American farmers. The logic is that American food aid can combine generosity with national self-interest, stabilizing U.S. agricultural markets while providing aid.

But that self-interest has a cost, and a significant one. Namely, there is often more than enough food nearby that could be purchased and transported at a far lower cost and with far less waste than by shipping American food across the ocean. Even Africa, the continent most commonly associated with hunger crises, produces more than enough food to feed itself — as does the world as a whole, for that matter. In light of this fact, requiring that food aid be sourced in the United States no longer makes sense.

It’s a bizarre case where the costs of cronyism so outweigh the benefits that even one of the primary beneficiaries, the American Farm Bureau Federation, supports reform. The problem is that this regulation is a relic of a different era, one in which food aid was a meaningful portion of American agricultural exports and in which local food production in hunger-stricken areas was rarely sufficient to meet local demand. That is no longer the case — food aid today accounts for less than 1 percent of agricultural exports and less than 0.1 percent of food production in the country. The times have changed, but our rules have not.

The other regulation mandates that at least half of all U.S. food aid be carried on U.S.-flag vessels, known as the Cargo Preference for Food Aid (CPFA). The Government Accountability Office (GAO) studied the effects of the CPFA, and found that the costs were significant. Overall, the GAO estimated that the CFPA increased costs of shipping by 23 percent between 2011 and 2014, making up over $107 million of the total $456 million cost.

This time, the original intent behind the rule was based on national security concerns rather than economic ones. Lawmakers intended to use the food aid program to subsidize a merchant marine that could be called upon in times of war. Yet again, the organization that the regulation is intended to benefit, the Department of Defense, supports reform. The vast majority of U.S. vessels carrying food aid do not meet minimum standards for reform, and the DoD has stated that elimination of the regulation would not impact America’s maritime readiness in the case of war.

It is an unfortunate fact that as much as 60 percent of the food aid budget is spent on items that have nothing to do with food — such as transportation costs for the American food that we’re sending halfway around the world on more expensive American ships. And it’s why simple reform, such as the bipartisan Food for Peace Reform Act of 2018, would free up nearly $300 million simply by reducing the requirement for U.S.-sourced food to 25 percent.

It’s rare that cronyism is so egregious and outdated that its beneficiaries support reform. When they do, lawmakers should take the hint, and support reform as well.

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Reigniting The Meaning Of Citizenship Through National Service

It’s been a long time since a common rite of passage among our nation’s men was to put on a uniform and defend your nation, community, and family. Yet at a time of increasing hyperpolarization in our country, as well as the deteriorating state of our nation’s youth in mind, body, and soul, national military service may be an idea worth considering once again.

National service has been ever-present in our country’s history. From militias in the Revolutionary War era to the wartime drafts in the Civil War, World War I, World War II, Korea, and Vietnam, to peacetime drafts through various parts of our nation’s past.

The legacy from those eras of conscription still remain in the form of the Selective Service system, which many of us remember being notified that we needed to register for upon reaching age 18.

The Selective Service system also has been the subject of debate in recent years, as many persons have considered whether women should register for it as well – such as during the 2016 Presidential election when Democratic nominee Hillary Clinton called for such.

Among other republics and democracies in the world national service is relatively common, from the nations of Europe to Africa, from the Middle East to Asia to South America. Conscription began falling out of favor since the end of the Cold War, as the general state of worry over military conflict faded.

Yet in recent years conscription has made a comeback. French President Macron has been trying to reintroduce military conscription in order to “foster patriotism and heal social divisions.” Norway recently expanded its military conscription in 2016 to include women, as Sweden has now re-introduced conscription as well.

Perhaps the most noted military conscription program is that of Israel, which requires all men and women to serve about two years in the Israel Defense Forces (IDF), with few exceptions. While brought about by military necessity, it has also cultivated an Israeli citizenry that has the character, grit, and sense of duty to keep their nation thriving.

It used to be that way in America, as serving in the military was a relatively common experience. In 1980, veterans totaled 18% of adults in the United States. In contrast, by 2016 that number had fallen to 7%.

At a time when our nation is reeling from divisions along seemingly every line possible, it is worth considering a common and shared experience as national service to reconnect our country together. The benefits are very clear in other nations, as despite often no overt military conflict conscription still provides a variety of security and social benefits to the country.

Undoubtedly the implementation of a conscription program, not seen in our nation for almost half a century, would be difficult initially. Not only have the times and culture changed, but so has the very nature of our armed forces.

Our military nowadays is an extremely high-tech organization and finding how to best utilize the massive manpower from our almost 330 million person nation would require careful delineation.

Furthermore, many of our nation’s youth, estimated currently at 71% of those between the ages of 17 and 24, are grossly unfit for military service. Creating a new conscript category and integrating them usefully into the nation’s military would be challenging, but given how seemingly every other nation is able to do it effectively we undoubtedly can find a way to as well.

The idea of national service would undoubtedly require a significant period of pilot programs and testing. The idea has been proposed frequently in the national discourse throughout the years and particularly during the Iraq and Afghanistan Wars. It is a big, nation-changing policy that certainly, if it gets further traction and consideration, would be a serious national debate.

National service is a very realistic program that could do a lot in solving many of our nation’s otherwise seemingly unsolvable problems, as well as reigniting reflection on the meaning of citizenry in a republic.

I think it is worth considering at our present time, as, although it seems a big change, nonetheless could revive our American spirit and heal our nation in an extraordinary way.

 

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New ‘Fetal Concerns Center’ opens June 4 at Children’s Hospital: ‘All the providers in 1 place’

MILWAUKEE — A new “Fetal Concerns Center” opens Monday, June 4 at Children’s Hospital of Wisconsin, and it’ll serve women with high-risk pregnancies. “One of the biggest benefits of having this space and this ability is that it puts all the …

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Yes, there really is a tax break for upper-income graduate students and Congress won’t let it expire – AEI – American Enterprise Institute: Freedom, Opportunity, Enterprise

In an earlier Evidence Speaks post this year, Susan Dynarski and Judith Scott-Clayton summarized important research showing that federal tax benefits for college tuition have had no measurable impact on increasing college-going behavior.[1] Moreover, they note that the benefits are numerous, overlapping and complicated. Yet for all their flaws, these tax breaks enjoy such strong support from lawmakers that even the oddest one, which quietly expires each year, is always revived in a last-minute bill just in time for the tax filing season. The tuition and fees deduction (“the deduction”) was recently extended for a seventh time in an omnibus budget bill in February.[2] Out of all the tuition tax benefits the government offers, this one should be relatively easy to let go because of whom it unintentionally targets.

@brybree via Twenty20

Here is how the deduction works. Tax filers can deduct up to $4,000 of tuition and fees paid for higher education in the tax year. It is an “above-the-line” deduction, meaning filers can claim it without having to itemize deductions. As a deduction, filers earn a benefit equal to their marginal tax rate. The maximum benefit any filer could extract from the deduction is $880, the top marginal tax rate of those who are eligible (22 percent) times $4,000. There is no limit to the number of times a filer can claim the deduction, so long as he has incurred tuition expenses, and it does not matter what type of credential he pursues. There is, however, an income limit. Taxpayers with adjusted gross incomes above $80,000 ($160,000 for joint filers) cannot claim it.

There is nothing odd about those terms per se, but they interact with other tax benefits the government offers for tuition such that only upper-income graduate students benefit from the deduction. First, undergraduates, while eligible for the deduction, don’t claim it because a different tax credit only for undergraduates is more beneficial: the American Opportunity Tax Credit, which is worth up to $2,500 in tax relief for filers earning up to $90,000 ($180,000 for joint filers).[3] Tax filers can claim only one tuition tax benefit although they usually qualify for more than one. Second, graduate students with lower and middle incomes are also eligible for the deduction, but they can claim the $2,000 Lifetime Learning Credit, which almost always delivers a bigger tax break than the tuition and fees deduction.[4] But the Lifetime Learning credit has a lower income cut-off than the deduction. Those earning over $66,000 ($132,000 for joint filers) in 2017 cannot claim it.[5]

That’s how the deduction ends up targeting upper-income graduate students. While graduate students would always obtain a larger benefit from the Lifetime Learning Credit, they cannot claim it if they earn more than $66,000 ($132,000 for joint filers). They can, however, claim the deduction until their earnings exceed $80,000 ($160,000 for joint filers). Thus a narrow band of graduate students, those earning between the income limits for the two benefits, are the only students who would claim the deduction. At those levels, their incomes are higher than the incomes of about 80 percent of U.S. households.[6] Of course, tax filers can unintentionally claim a less generous benefit if they are eligible for more than one, such as an undergraduate claiming the deduction when she was eligible for the American Opportunity Tax Credit, which does happen.[7]

What the data say about eligible students

Using a representative sample of graduate students in 2011-12, Kim Dancy of New America and I estimated that just 8 percent of graduate students would benefit from the deduction. Meanwhile, 64 percent of graduate students would benefit most from the Lifetime Learning Credit. The rest of graduate students (28 percent) were ineligible for any tax benefit because they have no taxable income, their tuition was fully covered by grants and scholarships, or their earnings were too high.[8] The analysis assumes that tax filers claim the benefit that provides them with the largest tax reduction if they qualify for more than one. These numbers have likely shifted in recent years, with even fewer students benefiting from the deduction, because Congress has increased the earnings cap for the Lifetime Learning Credit to account for inflation but left the limits for the deduction unchanged.

We also estimated the average benefit graduate students would claim through the deduction for the 2011-12 academic year. At $621, it was smaller than the $859 average benefit that filers eligible for the Lifetime Learning Credit could claim.[9] Due to small sample sizes, however, we were unable to reliably assess important characteristics of filers eligible for the deduction, such as field of study.

The deduction didn’t start out as a graduate school tax break

As is often the case in public policy, lawmakers did not set out explicitly to provide a tax break to upper-income graduate students. In fact, graduate students were never the target group for the tuition tax breaks; undergraduates were always the focus. Although graduate students have been eligible for the tax benefits since their inception, changes to the policies over the years have left the deduction benefiting upper-income graduate students alone.

Prior to mid-1990s, the federal government did not offer widely-available tax breaks for college tuition. The idea first gained prominence when President Clinton proposed a $10,000 deduction for college tuition as part of his “Middle-Class Bill of Rights” reelection platform.[10] After critics noted that a deduction would provide more help to families in higher tax brackets, Clinton added a separate tax credit for the first two years of college to his proposal to provide more even benefits.[11] Congress adopted the president’s idea for the credit in 1997, naming it the Hope Tax Credit, but rejected the additional proposal for a $10,000 deduction. They instead replaced that proposal with a separate credit for “lifelong learning” (i.e., the Lifetime Learning Credit) that families could claim for education after the first two years of college, including graduate school.[12]

Thus, President Clinton’s original idea for a deduction and a credit was replaced with two credits, the Hope Tax Credit and the Lifetime Learning Tax Credit. In keeping with their original purpose to provide middle-class tax relief, Congress capped income eligibility for both benefits at $55,000 ($100,000 for joint filers) in 1997.[13]

With these two tax credits on the books, the idea of a deduction for tuition would be unnecessary and redundant, yet Congress later decided to add one anyway. Seemingly out of nowhere, lawmakers included a $4,000 deduction for tuition and fees in the Economic Growth and Tax Relief Reconciliation Act of 2001, the sweeping bill that included President Bush’s campaign proposal to cut marginal tax rates.[14]

The deduction differed from the two initial tax credits in a key way, which partially explains why lawmakers added it. Families earning up to $80,000 ($160,000 for joint filers) would be eligible as of 2004. That was significantly higher than the income cutoff for the Hope and Lifetime Learning Credits at the time and would therefore offer tax benefits to families with incomes arguably well above middle class. But why not just raise the income limits on the existing credits then? Because creating the new deduction was a way to restrict costs relative to expanding the existing Lifetime Learning Credit in terms of forgone revenue to the government. Recall that the value of the deduction is worth the amount deducted times the marginal tax rate, which at the time it was created would have been $1,120 at the most.[15] That is about half the maximum value of the Lifetime Learning credit.[16]

In other words, the deduction was a way to let upper-income families into the college tax benefit club on the cheap. It also ensured their benefits would be smaller than those of the middle-class families, who were eligible for the credits.

At the time it was created, the deduction was as much an undergraduate benefit as a graduate one. Upper-income families would claim it for tuition paid in pursuit of either degree. According to my analysis referenced earlier, about the same share of graduate students as undergraduates qualified for it prior to 2009.[17] But in 2009, Congress would make it pointless for almost any undergraduate to claim the deduction. That year, lawmakers replaced the Hope Credit with the American Opportunity Tax Credit, which provided larger benefits than the deduction with an income cutoff even higher than the deduction. With upper-income undergraduates now qualifying for American Opportunity Tax Credit, graduate students became the only group left who could benefit from the original tuition and fees deduction.

Conclusion

While Congress never decided to directly create a special tax break for upper-income graduate students alone, opting to extend the deduction year after year is effectively the same thing. The latest one-year extension, which made the deduction available for the 2017 tax year, cost the government over $200 million in forgone revenue.[18]

At a time when an undergraduate education feels financially out of reach for so many families, it’s fair to ask why Congress continues to spend these resources on students who have already earned an undergraduate degree. Moreover, these students earn a median household income of $102,000, according to my analysis.[19] There does not appear to be a good answer to that question other than inertia. Lawmakers have always extended the benefit so they continue to extend it. They may not realize, however, that it no longer benefits undergraduate students.

All of the tax benefits may be a policy failure for not increasing enrollment or being overly complex, but at least those for undergraduates put more money in the pockets of low- and middle-income families working toward their first degree. Today, the deduction does neither. It helps those who already have an undergraduate degree and earn high incomes to boot. While its cost in terms of forgone revenue are relatively modest, those resources would be better spent on aid that encourages students to enroll in and complete an undergraduate degree.

Footnotes

[1] Sue Dynarski and Judith Scott-Clayton, “The Tax Benefits for Education Don’t Increase Education,” Brookings Institution, April 2018, https://www.brookings.edu/research/the-tax-benefits-for-education-dont-increase-education/.
[2] Bipartisan Budget Act of 2018, Public Law 115–123, § 40203 (2018).
[3] Internal Revenue Service, “Instructions for Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits) (2017),” https://www.irs.gov/pub/irs-pdf/i8863.pdf.
[4] There are some circumstances when the deduction might produce a larger benefit than the Lifetime Learning Credit if a filer paid tuition and fees below $4,000 and he is in the highest tax bracket of those eligible for the deduction. For example, a filer in the 22% tax bracket who deducts $3,000 in expenses receives a $660 tax reduction; under the Lifetime Learning credit his benefit would be $600.
[5] Ibid.
[6] Author’s calculation using the American Community Survey, 2016.
[7] Government Accountability Office, “Improved Tax Information Could Help Families Pay for College,” May 2012, https://www.gao.gov/assets/600/590970.pdf
[8] Jason Delisle and Kim Dancy, “Graduate Students and Tuition Tax Benefits,” New America, December 2015, 6–7, https://na-production.s3.amazonaws.com/documents/graduate-students-and-tuition-tax-benefits.pdf.
[9] Author’s calculation using the National Postsecondary Student Aid Study 2011–12. See also Jason Delisle and Kim Dancy, “Graduate Students and Tuition Tax Benefits,” New America, December 2015.
[10] William J. Clinton, “Address to the Nation on the Middle Class Bill of Rights,” December 15, 1997, www.presidency.ucsb.edu/ws/?pid=49591.
[11] Douglas Lederman, “The Politicking and Policy Making Behind a $40-Billion Windfall: How Clinton, Congress, and Colleges Battled to Shape Hope Scholarships,” Chronicle of Higher Education, November 28, 1997.
[12] Taxpayer Relief Act of 1997, Public Law 105–34 § 201 (1997).
[13] Taxpayer Relief Act of 1997, Public Law 105–34 § 101 (1997).
[14] Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107–16 § 431 (2001).
[15] The top marginal tax rate for filers eligible for the deduction was 28 percent in the mid 2000s.
[16] See endnote 4. for an explanation of how sometimes when tuition and fees are below $4,000, tax filers can qualify for a larger tax reduction through the deduction than if the Lifetime Learning Credit.
[17] Jason Delisle and Kim Dancy, “A New Look at Tuition Tax Benefits,” New America, November 2015, https://static.newamerica.org/attachments/10416-a-new-look-at-tuition-tax-benefits/TaxCredits11.2.277d3f7daa014d5a8632090f97641cee.pdf; and Jason Delisle and Kim Dancy, “Graduate Students and Tuition Tax Benefits,” New America, December 2015, 6–7, https://na-production.s3.amazonaws.com/documents/graduate-students-and-tuition-tax-benefits.pdf.
[18] Joint Committee on Taxation, “Federal Tax Provisions Expired in 2017” (JCX-5-18), March 9, 2018.
[19] Author’s calculation using the National Postsecondary Student Aid Study 2011–12. See also Jason Delisle and Kim Dancy, “Graduate Students and Tuition Tax Benefits,” New America, December 2015.

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Poker Run Benefits Children’s Miracle Network And Sanford Children’s Hospital

Dozens of bikers hit the road Saturday from J&L Harley Davidson in Sioux Falls. The 13th annual Bikes and babes poker run took off Saturday, with all proceeds benefiting Children’s Miracle Network and Sanford Children’s Hospital. Biker Steve Heim …

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Jane Lynch Joins Bay Street Theater’s 27th Annual Gala As Emcee Of ‘Some Enchanted Evening’

June 1, 2018 – Bay Street Theater & Sag Harbor Center for the Arts is pleased to announce that Jane Lynch will be the emcee for Some Enchanted Evening, the 27th Annual Summer Gala in Sag Harbor on the Long Wharf on July 7, 2018. The event benefits Bay Street’s educational and theatrical programs.

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Nicaraguans Block Roads Across Country, Want Ortega Out

(From UPI)

Across Nicaragua, protesters are blocking highways and streets to send a message to the government after more than 70 protesters were allegedly killed by police last month.

The tranques vary in size, from about 4-foot-high walls on Managua avenues that slow car traffic, to piles of metal and burning tires on vital highways that delay trucks transporting food staples to other parts of the country, causing food and medicine shortages in some regions.

Protesters, whom authorities have allowed to maintain the tranques without interference in most — but not all — cases, say they plan to block roads until they get justice for the more than 70 people who were killed during protests against the government’s plan to increase social security taxes and cut benefits.

What that justice entails depends on who is describing it, but generally consists of some iteration of Nicaraguan President Daniel Ortega leaving office.

Click here for article.

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With HB 514, Legislature Unambiguously Embraces School Segregation

There’s a word for what happens when majority-white suburbs pull their children from a majority-minority school district and place them into exclusionary, majority-white schools: segregation. With the advancement of HB 514, lawmakers are unambiguously embracing school segregation as state policy.

HB 514 allows four Charlotte suburbs – Cornelius, Huntersville, Matthews, and Mint Hill – the authority to create and operate their own charter schools. These suburbs can then limit enrollment in these schools to municipal residents. Cornelius is 85 percent white. Huntersville is 77 percent white. Matthews is 78 percent white. Mint Hill is 73 percent white. Students in these majority-white suburbs are assigned to the Charlotte-Mecklenburg Schools (CMS), where white students comprise just 29 percent of enrollment.

To facilitate the funding of the schools authorized by HB 514, a related budget provision (Section 38.8) creates a new authority allowing North Carolina municipalities to spend property tax revenues on any public school that “benefits the residents of the city,” including charter schools. As national school finance expert Michael Griffith notes, similar provisions in other states have led to school funding becoming “divided on class lines and on racial lines.”

It’s quite the one-two punch. First, the General Assembly allows these suburbs to create schools with the legal authority to exclude children from nearby communities comprised mostly of non-white students. Then, these suburbs can then use their out-sized property wealth to provide their racially-isolated schools with resource levels denied to other students in the school district. In other words, these schools will be both separate and unequal.

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{snip} What message does HB 514 send to the students of color in Charlotte who are witnessing policymakers use their power to create new schools for the exclusive use of their mostly white suburban classmates? Consider also the message delivered to white children in these suburbs who might emerge thinking that racially-isolated, better-funded schools are something that they deserve on the basis of their privileged status.

Furthermore, by exacerbating racial segregation, policymakers will be harming the educational trajectories of CMS students. Inclusive, integrated schools are a proven model for lifting the performance of all students. School integration leads to large, persistent academic gains, lower dropout rates, and higher lifetime earnings for students of color and students from low income families. When schools are integrated, white students become less prejudiced and enhance their capacity for working with others, with no negative impact on white student test scores. But when schools become more segregated, as proposed by HB 514, achievement gaps, incarceration rates, and dropout rates all tend to rise.

{snip}

The result of (HB 514) will ultimately amount to systemic racism. It’s about a system, not personalities, that marginalize communities of color. Supporters of HB 514 do so either because, or in spite of, this fact.

The fact is, we are now 64 years removed from Brown v Board of Education. We’re 53 years removed from the terroristic assassination attempt on Julius Chambers, whose legal heroism culminated in 1971’s Swann v. Charlotte-Mecklenburg Board of Education ruling that forced the integration of CMS. Yet the proponents of school segregation persist. In 2018, we have municipal governments in Cornelius, Huntersville, Matthews, and Mint Hill that are openly segregationist. We also have a General Assembly eagerly using the sanction of law to accede to the segregationist wishes of these communities. The mechanism created by HB 514 will undoubtedly be seized upon by other municipalities seeking to create white-flight schools of their own.

{snip}

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