[Economic Outlook, Highlights from FY 1994 to FY 2001, FY 2002 Baseline Projections]
[III. Major Functions of the Federal Government]
[14. Income Security]
[From the U.S. Government Printing Office, www.gpo.gov]
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14. INCOME SECURITY
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Table 14-1. Federal Resources in Support of Income Security
(Dollar amounts in millions)
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Percent
Function 600 1993 2001 Change:
Actual Estimate 1993-2001
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Spending:
Discretionary budget authority............................................ 31,918 39,546 24%
Mandatory outlays......................................................... 175,949 213,012 21%
Credit Activity:
Direct loan disbursements................................................ 85 20 -76%
Guaranteed loans......................................................... .......... 83 NA
Tax expenditures............................................................ 74,150 131,900 78%
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NA = Not applicable.
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Declining Number of Families in Poverty
A good indicator of the Nation's state of income security is the
poverty rate. Since passage of the Clinton-Gore Administration's
economic plan in 1993, the poverty rate has declined from 15.1 percent
in 1993 to 11.8 percent in 1999, a rate lower than any other year in the
1980s or 1990s. Furthermore, poverty among those aged 65 or older in
1999 was at an all-time low of 9.7 percent; and poverty among children
in families declined from 22 percent in 1993, a height last seen in the
mid-1960s, to 16.3 percent in 1999, lower than any other level in the
1980s or 1990s. Also noteworthy is that the 1999 poverty rate of black
children, while still a high 32.7 percent, was the lowest level ever
measured.
These improvements have been driven by an historic economic recovery
and landmark legislation designed to move families from welfare to work
by making work pay and providing support to low-income working families.
As evidence of this legislation's success, less than five percent of
families with children did not work in 1999, compared to nine percent in
1993. Furthermore, the poverty rate among working families with children
declined from 12.6 percent in 1993 to 11 percent in 1999.
Earned Income Tax Credit: The decline in poverty among working
families tells only part of the story. As the growing economy increased
employment opportunity, expansions to the Earned Income Tax Credit
(EITC) in 1993 were making work pay. The Administration's 1993 expansion
increased benefits significantly for those with two or more children,
and allowed workers who live with their children at least half of the
tax year to claim a credit. As a result of these expansions, credits
paid through the EITC program increased from $15.5 billion in 1993 to
nearly $31 billion in 1999, and the number of families receiving
assistance from the program increased by a quarter, from 15 million to
19 million.
The EITC also has been effective in attracting more workers to the
labor market. One study estimates that the EITC alone was responsible
for 34 percent of the increase in annual employment of single mothers
from 1992 to 1996.
Ending Welfare as We Know It
Even before the 1996 welfare reform legislation, many States were well
on their way to changing their welfare programs to jobs programs. By
granting Federal waivers, the Administration allowed 43 States--more
than all previous Administrations combined--to
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require work, time-limit assistance, improve child support enforcement,
and/or encourage parental responsibility. The vast majority of States
have chosen to build on their welfare demonstration projects approved by
the Administration in their implementation of welfare reform.
In 1996, the President signed the Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA), a bipartisan welfare plan that
has dramatically changed the Nation's welfare system. The law replaced
the Aid to Families with Dependent Children program with the Temporary
Assistance for Needy Families (TANF) program, which provides $16.7
billion annually in block grants to the States. The law contains strong
work requirements, time limits on assistance, performance bonuses to
reward States for moving welfare recipients into jobs and reducing out-
of-wedlock births, State maintenance-of-effort requirements,
comprehensive child support enforcement, and supports for families
moving from welfare to work including increased funding for child care.
State strategies are making a difference in the success of welfare
reform, specifically in job placement, child care, and transportation.
Cash Assistance: Since January 1993, the welfare rolls have fallen by
nearly 60 percent--from 14.1 million to 5.8 million--resulting in the
fewest number of people on welfare since 1968. The percent of Americans
on welfare is now at 2.1 percent, the lowest level since 1963. In August
1999, the Council of Economic Advisers (CEA) reported that the single
most important factor contributing to this historic decline is the
implementation of welfare reform. Of the caseload reduction from 1996 to
1998, the CEA estimated that approximately one-third was due to Federal
and State policy changes resulting from welfare reform and about 10
percent was due to the strong economy.
Employment: At President Clinton's insistence, the 1996 welfare reform
legislation included both rewards and penalties to encourage States to
place people in jobs. According to reports filed by 46 States, more than
1.2 million welfare recipients nationwide went to work in just the one-
year period between October 1998 and September 1999. Retention rates
also were promising: 78 percent of those who got jobs were still working
three months later. States also reported an average earnings increase of
31 percent for former welfare recipients, from $2,027 in the first
quarter of employment to $2,647 in the third quarter.
The first three years of data on work activity since welfare reform
also show that all States met the law's work participation requirements
for overall work activity levels. Nationally, 38 percent of all welfare
recipients were working or in work-related activities in 1999. The data
also show that nationwide, the percentage of welfare recipients working
has increased to nearly five times the level it was when the President
took office, rising from seven percent in 1992 to an all-time high of 33
percent in 1999. The vast majority of working recipients are in paid
employment, with the remainder involved in community service or
subsidized employment.
Welfare-to-Work Grants: Because of the President's leadership, the
1997 Balanced Budget Act included $3 billion over 1998 and 1999 for
Welfare-to-Work grants to help States and local communities move long-
term welfare recipients and certain noncustodial parents into lasting,
unsubsidized jobs. Funds can be used for job creation, job placement and
job retention efforts, including wage subsidies to private employers and
other critical post-employment support services. The Department of Labor
provides oversight, but most of the dollars are placed through local
business-led boards into the hands of those who are on the front lines
of the welfare reform effort. For 1998 and 1999, the Administration
awarded 190 competitive grants that support innovative local strategies
to help noncustodial parents and individuals with limited English
proficiency, disabilities, substance abuse problems, or a history of
domestic violence get and keep employment. This program also is
discussed in Chapter 11, ``Education, Training, Employment, and Social
Services.''
Welfare Recipient Hiring: The Welfare-to-Work Tax Credit, enacted in
the Taxpayer Relief Act of 1997, offers employers a tax credit equal to
35 percent of the first $10,000 in wages in the first year of
employment, and 50 percent of the first $10,000 in wages in the second
year for a total credit of up to
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$8,500 for each welfare recipient hired and retained. This credit
complements the Work Opportunity Tax Credit, which offers a credit of up
to $2,400 for the first year of wages for eight groups of job seekers.
From 1997 to 2000, employers were eligible to claim these tax credits
for over 1.4 million newly-employed welfare recipients and other
disadvantaged individuals. Both credits are currently available through
December 2001. These credits also are discussed in Chapter 11.
In addition, at the President's urging, the Welfare to Work
Partnership was launched in May 1997 to lead the national business
effort to hire people from the welfare rolls. The Partnership began with
105 participating businesses, and has now grown to more than 20,000
businesses of all sizes and industries. Since 1997, these businesses
have hired an estimated 1.1 million welfare recipients, surpassing the
challenge the President set in May 1998. In addition, the Small Business
Administration is addressing the unique and vital role of small
businesses that employ over half of the private work force, by helping
small businesses throughout the country connect with job training
organizations and job-ready welfare recipients. Federal agencies also
have played a role and have hired nearly 50,000 welfare recipients.
Teen Pregnancy Prevention: Significant components of the President's
comprehensive effort to reduce teen pregnancy became law when the
President signed the welfare reform legislation. PRWORA requires
unmarried minor parents to stay in school and live at home or in a
supervised setting; encourages ``second chance homes'' to provide teen
parents with the skills and support they need; and provides $50 million
a year for five years in new funding for State abstinence education
activities. Data show that teen birth rates have declined nationwide by
20 percent from 1991 to 1999, and are now at the lowest rate on record
since tracking began 60 years ago. These improvements are seen among
younger and older teens, married and unmarried teens, all States and all
ethnic and racial groups.
Rewards for High Performing States: The 1996 welfare reform
legislation included $200 million annually for awards to States that
perform especially well in achieving the goals of TANF and $100 million
for States that reduce out-of-wedlock births. In December 1999, the
President announced that 27 States were awarded the first high
performance bonuses to reward superior results or improvement in moving
people from welfare to work. A year later, 28 States received the second
round of awards. Each year, the $200 million in bonuses went to the top
10 States with the best records in each of four categories related to
moving parents on welfare into jobs and their success in the work force.
Through regulations to award future high performance bonuses, the
Administration also has put in place new incentives for States to
provide programs that help working families succeed and encourage the
formation of two-parent families. The final regulation retains the
original job entry and success in the work force measures, and adds
measures for participation in Medicaid and the State Children's Health
Insurance Program (SCHIP), participation in the Food Stamp program,
receipt of child care subsidies by eligible families, and family
formation and stability. These new measures will ensure that welfare
reform will continue to move millions of families from dependence to
independence by encouraging work, supporting working families to help
them succeed and stay off welfare, and increasing the number of children
living with married parents. A total of $140 million in bonus funds is
available annually for the work measures, with $60 million available for
the work support and family formation measures.
In 1999 and 2000, HHS awarded bonuses of $20 million to each of four
States and the District of Columbia for achieving the Nation's largest
decreases in out-of-wedlock births. These bonuses were awarded under the
welfare reform law, which provided $100 million annually for up to five
States with the largest reductions in the proportion of out-of-wedlock
births that also show decreases in their abortion rates. Nationwide, the
1999 birth rate for unmarried women was six percent lower than its high
in 1994, and three percent lower than in 1992.
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Creating Comprehensive Support for Working Families
Child Care: The number of children with parents who work outside of
the home is higher than ever before and child care expenses are often
the second or third largest item in a low-income working family's
household budget. The 1996 welfare reform law increased child care
funding by $4 billion over six years to provide child care assistance to
families moving off welfare and to other low-income families. The
Administration also secured additional discretionary funds for subsidies
and quality enhancement, which were major components of its
comprehensive child care initiative to address the struggles our
Nation's working parents face in finding child care they can afford,
trust and rely on and that will help to prepare their children for
success in school.
An important element of that initiative was to increase the
availability of child care subsidies. The Child Care and Development
Fund (CCDF) provides grants to States to subsidize and improve the
quality of care for low- and moderate-income children. Under this
Administration, Federal funding for child care subsidies has more than
doubled, increasing from $1.8 billion in 1993 to an estimated $4.4
billion in 2001. In 2001, the discretionary contribution to the CCDF
increased by $817 million, bringing total discretionary child care
spending to $2 billion and allowing the program to serve nearly 150,000
additional children. Combined with the child care funds provided in
welfare reform, the new discretionary funds will enable the program to
serve over 2.1 million children monthly in 2001.
Child Support: An important component of the Administration's policies
to help working families is to ensure that unmarried parents receive the
support they are entitled to under the law from noncustodial parents.
The 1996 welfare reform law included significant provisions to
strengthen child support enforcement. Among other changes, the
legislation streamlined paternity establishment procedures, provided for
State and Federal registries of newly hired employees, established
statewide support collection and distribution centers, and initiated
tough new penalties when child support obligations are not met. In
addition, in 1998, the President signed legislation enacting tougher
penalties for parents who repeatedly fail to support children living in
another State or who flee across State lines. Today, parents who owe
child support can have their wages garnisheed, their bank accounts
seized, their Federal loans denied, and their tax refunds withheld to
help make up what they owe.
Since the Administration took office, child support collections have
doubled from $9 billion in 1993 to $18 billion in 2000. The number of
fathers taking responsibility for their children by establishing
paternity rose to a record 1.5 million in 1999 (the most recent data
available), nearly triple the 1993 figure of 554,000. In addition, a new
program established under PRWORA has identified nearly 900,000
delinquent parents with accounts valued at $3 billion. In 2001, net
Federal costs for child support will be an estimated $2.4 billion.
Child support is an important source of income for poor children. One
study estimates that in 1997, child support lifted a half million
children out of poverty, and that for poor children who receive child
support, it represents, on average, over one-quarter of their family's
income.
Individual Development Accounts (IDAs): In 1992 during his campaign,
the President proposed Individual Development Accounts (IDAs) as a way
to empower low-income families to save for a first home, a post-
secondary education, or to start a new business. The 1996 welfare reform
law authorized the use of TANF grants to create IDAs. In addition, in
1998 the President signed legislation creating a five-year $125 million
demonstration program. Households that are eligible for TANF, qualify
for the EITC, or have incomes below 200 percent of the Federal
guidelines, and have a net worth below $10,000 are eligible to
participate in the demonstration. In 1999 and 2000, the Department of
Health and Human Services awarded nearly $20 million to 65 grantees that
will establish over 16,000 savings accounts for low-income workers. The
2001 Budget included $25 million for IDAs to create over 20,500 new
accounts.
Food Stamps: As parents leave welfare for work, their continued access
to nutritional as
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sistance is a critical factor in making the transition to self-
sufficiency. It is also important that States reach out to low-income
working families who may be eligible for food stamps since the
assistance could keep them off welfare. In 1993, the food stamp program
assisted nearly 27 million individuals at a cost of $23.6 billion. Both
participation and funding have declined dramatically since then due to
the strong economy, the success of moving people from welfare to work,
changes in eligibility rules, and other consequences of welfare reform.
In 2001, food stamps is expected to serve approximately 17.5 million
people at a cost of $19.6 billion.
The Administration has taken a number of actions to simplify program
administration for States, make the program more workable and easier for
low-income working families to navigate, provide guidance to States on
what their responsibilities are and how to improve practices, and use
bonuses and sanctions to hold States accountable. In 1999 and 2000 the
President took executive actions to help ensure working families who
need food stamps have access, including: regulations to provide for
transitional food stamp benefits for 3,000 individuals leaving TANF in
2001, with 20,000 individuals receiving assistance when fully
implemented; longer reporting cycles for almost 200,000 individuals in
2001, with four million individuals benefitting when fully implemented;
reviews of State processes to ensure that States comply with program
rules; a public education campaign; and new steps that allow States to
reinvest liabilities incurred due to high payment error rates in
activities that improve access. In addition, a regulatory action making
it easier for some recipients to own a car and still receive food stamps
followed by legislation proposed by the Administration permitting States
to use more generous TANF rules for vehicles when determining food stamp
eligibility, in combination, will benefit 76,000 individuals in 2001,
and when fully implemented, will benefit nearly 460,000 individuals,
most of whom live in working families with children.
Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC): WIC provides vouchers for nutritious supplemental food
packages, nutrition education and counseling, and health and
immunization referrals to low-income women, infants, and children.
During this Administration, funding has grown by over 40 percent to over
$4 billion, and the program now helps nearly half of all infants. In
2000, approximately 7.2 million individuals participated in the program
monthly and funding for 2001 is sufficient to support participation by
just over 7.3 million people.
Income Assistance to Aged, Blind and Disabled Individuals: The
Supplemental Security Income (SSI) program, administered by the Social
Security Administration (SSA), provides benefits to needy aged, blind,
and disabled adults and children. On average in 2000, 6.3 million
individuals received Federal SSI benefits on a monthly basis. These
benefits totaled $31 billion in 2000. SSI uses the same disability
eligibility criteria as the Social Security Disability Insurance
Program. Policies affecting both programs are discussed in Chapter 15,
``Social Security.''
SSI Children: The 1996 PRWORA legislation created new eligibility
criteria for children to receive SSI to ensure that only needy children
with severe disabilities received benefits. Between 1990 and 1996, the
number of children eligible for SSI benefits more than tripled from
approximately 309,000 to more than 955,000. This growth was due, in
part, to the difficulty in determining whether a child's impairment was
of comparable severity to an impairment that would disable an adult.
PRWORA eliminated this somewhat broader standard, and created a new
definition of childhood disability that states a child's impairment, or
combination of impairments, is considered disabling if it causes marked
and severe functional limitations.
In February 1997, SSA published final interim rules that applied the
new definition of disability to applicants as well as 288,000 child
beneficiaries, approximately 100,000 of whom would ultimately lose
coverage. To ease the transition for the families of these children, an
Administration proposal was enacted to continue Medicaid coverage to
children who lost their SSI benefits as a result of PRWORA. SSA has
since identified ways to clarify the rules and simplify the processes.
The final regulations went into effect on January 2, 2001.
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Unemployment Compensation: Unemployment compensation, overseen by the
Department of Labor's Employment and Training Administration, provides
benefits to individuals who are temporarily out of work through no fault
of their own and whose employer has previously paid payroll taxes to the
program. State payroll taxes finance the basic benefits paid out of a
dedicated trust fund. States set benefit levels and eligibility
criteria; benefits are not means-tested and are taxable. Regular
benefits are typically available for up to 26 weeks of unemployment.
Additional benefits are often provided when unemployment is high and
rising.
Spending on the unemployment compensation program varies based on
economic conditions and demonstrates the Administration's success in
achieving economic growth and low unemployment. In 1993, the
unemployment rate was seven percent, and total spending on those
benefits exceeded $36 billion. By 2000, as a result of the strong
economy and the wide availability of jobs, the unemployment rate was
four percent and total spending on those benefits was less than $22
billion--a decrease of almost 40 percent since 1993.
President Clinton worked to improve access to unemployment
compensation to help new parents afford family leave. A Department of
Labor regulation, effective in August 2000, allows States to create
experimental birth and adoption unemployment compensation programs that
provide partial wage replacement for parents caring for newborns and
newly adopted children.
Addressing the Gaps in Welfare Reform
Restoration of Benefits for Legal Immigrants: The Administration
believes that legal immigrants should have the same economic
opportunity, and bear the same responsibility, as other members of
society. Upon signing the 1996 PRWORA law, the President pledged to work
toward reversing the cuts in benefits to legal immigrants that were
unrelated to the goal of moving people from welfare to work. Since that
time, the President's leadership has resulted in significant benefit
restorations for immigrants.
More than half a million noncitizens would have been affected by
PRWORA's Supplemental Security Income (SSI) eligibility restrictions in
2003. Legislation enacted after PRWORA restored eligibility to about
three quarters of these individuals. The Balanced Budget Act of 1997 and
the Noncitizens' Benefit Clarification and Other Technical Amendments
Act of 1998 provided $11.5 billion over five years to restore Medicaid
and SSI to 380,000 disabled and elderly legal immigrants who were living
in the U.S. when the welfare law was enacted on August 22, 1996. These
restorations provided critical assistance to legal immigrants who were
unable to work to support themselves.
PRWORA also made most immigrants ineligible for food stamps, an
important source of nutrition assistance for many working families, as
well as for those unable to work. PRWORA would have denied food stamp
eligibility to almost 600,000 noncitizens in 2002. Legislation enacted
after PRWORA restored eligibility to approximately 30 percent of these
individuals. In response to the Administration's request, the
Agricultural Research, Extension, and Education Reform Act of 1998
included $818 million over five years to restore food stamp benefits to
an estimated 175,000 elderly, disabled, and other needy immigrants,
including 45,000 children who lawfully resided in the United States as
of August 22, 1996.
These accomplishments restored important nutrition and income security
protections to large categories of vulnerable noncitizens. Nevertheless,
most noncitizen adults (except for refugees and certain other special
categories of immigrants) are ineligible for food stamps unless and
until they acquire 40 quarters of employment coverage, even if they have
been in the U.S. since before enactment of PRWORA. With regard to SSI,
similar restrictions apply to most noncitizens entering the U.S. after
August 22, 1996. Immigrants entering the U.S. after that date also are
banned from Medicaid until they have been in the United States at least
five years, a provision that is expected to affect 430,000 immigrants in
2003.
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Employee Retirement Benefits
Federal Employee Retirement Benefits: The Civil Service Retirement
System (CSRS) and the Federal Employees' Retirement System (FERS)
provide pension coverage for approximately 2.7 million active employees,
and pay out benefits to about 2.4 million retired employees and
survivors. Both systems provide a defined benefit pension. FERS
employees (those hired since January 1, 1984) are also covered by Social
Security and a defined contribution plan--the Thrift Savings Plan (TSP).
CSRS employees may contribute to TSP but do not receive the automatic
and matching agency contributions enjoyed by FERS enrollees. Since 1993,
the number of annuitants (retired employees and survivors) has grown by
10 percent, from 2.2 million to 2.4 million, and the annuity payments
have increased by over one-third, from $35 billion to $47 billion.
Over the past eight years, the service provided to this growing
customer population has improved markedly. For example, in 1993 there
was no self-servicing of customer service requests. This has increased
to over 30 percent today. This improved service is being delivered more
efficiently. For example, with fewer staff, processing times for annuity
claims have been reduced substantially. This better and more efficient
service is reflected in customer satisfaction surveys, which show an
improvement from around 80 percent in 1993 to well over 90 percent today
in annuitant satisfaction with the handling of service requests. Other
notable accomplishments since 1993 include preserving the benefits
structure during an extremely tight budgetary environment, providing
through legislative action a more equitable treatment of employees
placed in the wrong retirement system, and creating a greater incentive
for employees to save by enabling them to contribute to the TSP
immediately upon being hired.
Private Pensions: The Department of Labor's Pension Benefit Guaranty
Corporation (PBGC) insures against company bankruptcy the pensions of
about 42 million workers and retirees who earn defined benefit pensions.
Before 1992, PBGC's books could not be audited. Worse, PBGC had for many
years run an accounting deficit; that is, each year its liabilities had
exceeded its assets. After well-publicized bankruptcies in the airline
and steel industries, PBGC had for some years been talked of as the next
savings and loan crisis.
That situation has turned around. With improved internal controls,
PBGC has received ``clean'' audit opinions since 1993. Primarily due to
the Administration's 1994 law (the Pension Protection Act) that
increased PBGC revenues and also due to improved economic conditions and
fewer bankruptcies, PBGC has been running annual surpluses and is
predicted to end 2001 at $9 billion in the black. With its finances
stabilized, PBGC is improving customer service. PBGC is working to
shorten the time to calculate final benefit levels from six years in
1997 to three years in 2002. (Retirees are getting approximate pensions
while PBGC is setting final benefit levels.)
Also at the Department of Labor, the Pension and Welfare Benefits
Administration (PWBA) establishes and enforces safeguards to protect the
roughly $4 trillion in private pension assets. More than 90 million
participants and beneficiaries are now in private pension plans.
PWBA is working to recover more benefits through customer assistance--
an estimated $54 million for 2001 compared to $15 million in 1995.
During this period PWBA corrected prohibited transactions and recovered
or protected plan assets totaling more than $1 billion. At the same
time, PWBA is more speedily processing the exemptions that allow certain
financial transactions that are needed by pension plans, reducing the
time taken to 200 days in 2001, a 17 percent improvement from the 1999
average of 242 days. PWBA has, moreover, simplified the annual report
(the Form 5500) filed by companies that sponsor pensions. PWBA has also
sped the processing of this data, in order to move more quickly to
protect pensions and to keep participants better informed about their
pension assets.
Tax Incentives for Retirement Savings: The Federal Government
encourages retirement savings by providing income tax benefits to both
individuals and companies. These tax benefits have been expanded and
also simplified so that more companies can offer
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pensions. The Administration developed the new SIMPLE pensions (Savings
Incentive Match Plans for Employees), which is an easy way for companies
to set up 401(k)-like retirement accounts for their workers. Generally,
earnings devoted to workplace pension plans and to many traditional IRAs
receive beneficial tax treatment in the year earned and ordinarily are
taxed only in retirement, when lower tax rates usually prevail.
Moreover, taxpayers can defer taxes on the interest and on the other
gains that add value to these retirement accounts. The new Roth
Individual Retirement Accounts (IRAs) however, allow contributions to be
made from after-tax earnings, but account earnings are free from tax
when used in retirement, which is a novel tax benefit.
President Clinton also signed into law expanded eligibility for
deductible IRAs. So that more middle-income taxpayers with workplace
retirement plans could open the valuable deductible IRAs, the Taxpayer
Relief Act of 1997 generally doubled, over time, the income limits for
participation. Previously, single taxpayers with adjusted gross incomes
below $25,000 could open full deductible IRAs, with the maximum size of
the IRA phasing out until the income limit of $35,000 was reached.
Married taxpayers with joint returns were eligible at higher income
levels, with a phase-out range of $40,000 to $50,000. Under the new law,
the IRA phase-out ranges increase until the eligibility limits are
$50,000 to $60,000 for single taxpayers (2005 and thereafter) and
$80,000 to $100,000 for couples filing jointly (2007 and afterwards).
This law also greatly expanded (to $150,000 to $160,000) the deductible
IRA income limit for taxpayers not in workplace retirement plans but
whose spouses are. Another law increased the maximum size of spousal
IRAs for non-working spouses.
Additionally, President Clinton succeeded in making IRAs more flexible
through legislation enacted in the Health Insurance and Portability and
Accountability Act of 1996. That law allows the long-term unemployed to
make penalty-free withdrawals from IRAs in order to pay their health
insurance premiums and also for large medical expenses.
All the pension and retirement-saving tax incentives amount to an
estimated $115 billion in 2001--decidedly the largest set of preferences
in the income tax system--and nearly double the amount in 1993. Total
tax expenditures included in this function have increased from $74
billion in 1993 to an estimated $132 billion in 2001.