This week, think tankers welcome December with some hearty tax code analysis, an entree of means-testing federal education aid, a side of Japan's military policy and, for dessert, the latest challenges in low-income housing subsidies. Bon appetit!

  • Making tax cuts permanent. With the 2001 and 2003 Bush tax cuts set to expire at the end of 2010, The Center on Budget and Policy Priorities analyzed what extending these cuts might mean for income distribution and government budgets. Once the need to pay for the tax cuts is taken into account, renewing them is best seen a tax cut for the top 20 percent of households, financed by a net tax increase or benefit reduction for the remaining 80 percent. For perspective, the cost of tax cuts for those making over $1 million will exceed the entire 2007 budget of the Department of Education, the budget of the Department of Veteran's Affairs, and the combined budgets of the Departments of Housing and Urban Development, Energy, and State. Thankfully, it looks like these cuts -- and the problems they institutionalize -- will not be perpetuated by the incoming administration. -- DH
  • Opening Higher-Ed doors. A few years ago, the GAO admitted they had next to no idea whether federal college grant programs actually sent more low-income students to college. Brookings took some initiative and looked back at stats -- on tuition prices, unemployment rates, college enrollment rates, and grant award levels -- from 1996-2005 and figured out that, indeed, grant awards are a good thing -- at least for some people. Federal Pell grants (the largest grant program in the U.S.) typically cut $1,000 per year from students' tuition burden. When low-income students (whose families earn less than $30,000 per year) got these grants, their college attendance rates increased a couple percentage points over the study's time frame. But the grants didn't end up putting more middle-income students (whose families earn between $30,000 and $50,000 per year) in college than usual. -- CP
  • An old alliance that needs a tune-up. [PDF] A new American Enterprise Institute report calls for more balance in the American-Japanese alliance in order to ensure security in a region affected by both the military and economic rise of China and an increasingly intransigent North Korea. The alliance currently suffers from a "capability gap" that stems from discordant domestic security policies on each side of the alliance, but especially in Japan. This gap, the paper argues, should be closed by changing Japan's post-World War II constitution to allow its military to act as more than a self-defense force, thus playing a more prominent role in shared military security efforts in the region. -- SW
  • The burdens of housing. [PDF] The Urban Institute has a primer on federal housing assistance for low-income renters. Monthly rent or mortgage payments constitute the single biggest expenditure in most family budgets, posing an unbearable burden for many low-earners in the US as the rise of housing prices has outpaced increases in wages for the past few decades. Federal housing assistance only serves about one of every four eligible households, and an estimated 12.4 million low-income renters face serious housing problems without any assistance. The Urban Institute says there's no silver bullet, but additional funding, the replacement of concentrated housing projects with mixed-income developments, job training programs, and rigorous monitoring of experimenting with housing subsidy formulas are all necessary first steps. -- ZA

-- TAP Staff


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