ECONOMIC REPORT OF THE PRESIDENT

udgetary flexibility for additional assistance when economic conditions
deteriorate, so as to increase the efficacy of TANF during downturns.
Outside of TANF, the budget proposes to invest $12 billion to ensure
adequate food for low-income children during the summer months, as many
low-income children receive food at little or no cost during the school year
but lose this support when school is not in session.
Finally, the budget proposes an $11 billion investment to prevent and
end family homelessness by 2020. Reducing homelessness directly improves
inequality today, and recent research suggests that moving children and
their families to better neighborhoods can generate substantial earnings
gains when those children become adults (Chetty and Hendren 2015;
Chetty, Hendren, and Katz 2016).
In addition, an expansion of paid leave would also help reduce
inequalities in childhood investment, employment, and incomes. While
current law allows many workers to take time off without pay to care for a
new baby or a sick family member, millions of families cannot afford to do
so. Employers are not required to offer paid leave in most states even though
research shows that the availability of paid maternity leave increases the
likelihood that mothers return to their jobs following the birth of a child,
which leads to better outcomes for infants (CEA 2014c).
As documented throughout this report, the ACA has already resulted
in an additional 20 million American adults with health insurance and, in
doing so, has substantially reduced income inequality. Writing in the Journal
of the American Medical Association, the President outlined a number of
suggestions as to how the country can continue making progress in expanding
health insurance coverage, improving the quality of care, and reducing
health care costs (Obama 2016). These suggestions include the adoption of a
Medicaid expansion by all 50 states, increasing the financial assistance available
to families purchasing Marketplace coverage, and considering a public
option to promote additional competition in the exchanges. In addition,
as the ACA covers the full cost of State Medicaid expansions only through
2016 before gradually reducing the level of Federal support to 90 percent,
the budget proposes to cover the full cost of Medicaid expansion for the first
three years after a state expands, regardless of when this expansion occurs,
to better support states taking action to expand Medicaid.
Reforming the Tax System
The budget also proposes responsible tax increases on the most fortunate
Americans to finance inequality-reducing investments in working
and middle-class families and to drive down future deficits. The budget
proposes to reform the taxation of capital income by increasing the top tax
Progress Reducing Inequality | 191