Human Needs Report Article

The Human Needs Report is the Coalition on Human Needs' newsletter on national policy issues affecting low-income and vulnerable populations. It is published every other week while Congress is in session.

Deep Cuts in the President's Budget; Committees Ready to Act (2/25/05)

The President submitted a budget on February 7 that contained deep cuts to human needs spending, more tax cuts, and proposed changes to the budget process that will make it more difficult for Congress to increase spending for services in the future.

Several members of the Coalition have done wonderful analyses of the President's budget and many can be found on the CHN budget issues page. This report relies on findings by the Center on Budget and Policy Priorities, Center for Law and Social Policy, National Head Start Association, Food Research and Action Center, Families USA, National Education Association, the Workforce Alliance, Child Welfare Association of America, Children's Defense Fund, and others. Advocates in the states have done a great job getting out the message on budget cuts. Press coverage from around the country can be found on the CHN budget basics page.

•  Medicaid is cut $45 billion over 10 years. In the fifth year of these cuts, the funds lost to states would be enough to provide health coverage to 1.8 million children or 345,000 people over 65 nationwide. (Families USA has tables showing the breakdown by state.)

•  Food Stamps are cut $1.1 billion over 10 years. An estimated 200,000 – 300,000 people will lose Food Stamps as a result of this cut.

•  By FY 2009, 300,000 fewer children will receive Child Care assistance than today. This is in addition to the loss of 200,000 child care placements that has occurred since 2003. Federal child care funding has stayed the same for the last three years, and would remain unchanged through FY 2010 in the President's proposal. Each year, inflation shrinks the value of the child care funds.

•  The budget cuts the number of children served by Head Start by 25,000 in FY 2006 and by 118,000 by 2010. The budget calls for demonstrations in a number of states to transfer the authority to run Head Start away from local programs and to the state.

•  Elementary Education (No Child Left Behind) is underfunded by at least $12 billion in FY 2006. While these education funds rise 3 percent after inflation over the previous year, they fall short of the amount promised to school districts by the legislation. (The cumulative shortfall since the legislation passed is almost $40 billion.)

•  Special Education programs for children with disabilities would be cut 18 percent in 2010, taking inflation into account. Between FY 2006- FY 2010, the cuts would total nearly $7.6 billion.

•  The budget cuts $920 million from high school and vocational programs . The President's budget highlights a $1.5 billion high school initiative, which includes $250 million for expanding No Child Left Behind-type testing to high school. The remaining $1.25 billion for high school programs is what is left after eliminating $2.17 billion in vocational and technical education, college-readiness and similar programs.

•  Literacy, basic education and English as a Second Language services would be cut by at least two-thirds in FY 2006. At least 470,000 people would lose access to these services.

•  Job Training and Employment Services is cut by nearly $281 million from various job training programs, a 4 percent cut from current funding. The budget eliminates programs for migrant and seasonal farmworkers and youthful offenders.

•  Community and Economic Development is cut by nearly $2 billion. These programs provide housing, transportation, and other economic development assistance for low-income communities. The budget eliminates $5.7 billion in 18 such programs, replacing them with a new $3.7 billion block grant.

•  The budget cuts LIHEAP (Low Income Home Energy Assistance Program) by $182 million (down from nearly $2.2 billion in FY 2005). The Administration projects that 4.5 million low-income households will receive energy assistance in FY 2006.

•  The Administration again proposes a block grant for foster care , prevention, case management, and other child welfare services. A block grant would end the 40-year federal guarantee of financial support for foster placements for abused or neglected children. States opting for block-granted funding may receive an increase in the first year, but over 5 years overall funding is the same as under current law, meaning that states receiving more in the first year would receive less in future years, even if the number of abused or neglected children rises. Other child welfare programs are level-funded, despite the fact that about 370,000 abused or neglected children now receive no services. Providing them with home visiting services would cost about $1.1 billion a year over current funding levels.

•  The budget proposes to restrict federal outlays for Section 8 rental vouchers by ending the current practice of providing local housing authorities with the funds necessary to support a specified number of rental vouchers. Instead, the housing authorities would receive a pot of funds and would be allowed to adopt restrictive policies such as time limits or higher tenant payments if the funding were inadequate to cover rising rents. In 2010, 370,000 fewer families would receive rental vouchers than in 2005.

Changes to Budget Process

5-Year Discretionary Caps
The budget does not provide for any increases in spending for discretionary programs (those that must be appropriated each year) beyond the level proposed for FY 2006 over five years – not even increases for inflation. Discretionary programs include defense, homeland security, education, job training, WIC, biomedical research, and many others. Because defense and homeland security will increase and inflation will take its toll, by 2010

•  education and training would be cut 15 percent

•  public health programs (not including Medicaid or Medicare) would be cut 14 percent

•  total domestic discretionary programs (not counting homeland security) would be cut 16 percent, or $214 billion.

The Center on Budget and Policy Priorities has released an invaluable analysis showing the level of cuts affecting each state for a large number of federal programs.  Tables show funding and/or participant cuts in 2010 as well as totals from 2006-2010: http://www.cbpp.org/2-22-05bud-tables.pdf . You can read the full analysis at http://www.cbpp.org/2-22-05bud.htm

Lopsided Pay-As-You-Go Rule

The budget would make it more difficult to increase spending on services for low-income families - and would make it easier to pass more tax cuts. Under the President's plan, Congress could not expand or improve programs like Medicaid unless they paid for the improvement by cutting from the same or other mandatory programs. Mandatory programs – which are funded automatically - include Medicaid, Medicare, Social Security, Food Stamps, School Lunch, Supplemental Security Income (SSI) for elderly or people with disabilities, Foster Care, and Temporary Assistance for Needy Families (TANF). The President' budget would limit spending for mandatory programs by an unbalanced “pay-as-you-go” rule. But tax cuts would be exempt from the rule. Congress could pass even more tax cuts for the well-off and for corporations, even if they increased the deficit. A “pay-as-you-go” rule in effect in the 1990s that was critical to reducing the deficit applied to both mandatory programs and tax cuts. An improvement in Medicare, for example, could be paid for by closing a corporate tax loophole.

The budget would require Congress and the White House to estimate the cost of extending or making the tax cuts permanent as $0. Under the President's plan, the Congressional Budget Office and Office of Management and Budget would hereafter treat the extensions of the 2001 and 2003 tax cut as if the extensions have already been enacted. But the true cost of extending the tax cuts, according to the Congressional Budget Office, is $2.1 trillion over the next ten years.

The Coalition on Human Needs is preparing a deeper analysis of the President's budget with input from our member organizations. That analysis will be circulated by email and posted on our website when complete.

Next Steps

The House and Senate budget committees are planning to mark up their budget resolutions the week of March 7. Although the House and Senate may take slightly different approaches, it is expected the House and Senate budget chairmen (Rep. Jim Nussle, R-IA and Sen. Judd Gregg, R-NH) will base their bills on many of the President's proposals. That leaves just a little more than a week for advocates to weigh in.

The message to Congress is simple and clear:

•  Do not make deep cuts in mandatory programs.

•  Do not make deep cuts to domestic discretionary programs.

•  Reject harmful changes in budget rules that will make it more difficult for Congress to increase spending for low-income services.

Several groups are organizing a national call-in day on the budget. The Coalition will circulate more information about the call as soon as is available. Advocates are strongly encouraged to send an email letter to their senators and representative and to encourage their networks to send one as well:

For More Information

CHN budget issue page