The House launched an unprecedented attack on services that aid low-income families and vulnerable people this week, passing several bills to cut Medicaid, Food Stamps, foster care, child support collections, student aid and Supplemental Security Income for poor elderly and disabled. Congress made the cuts in order to pay for $106 billion in new tax breaks that will mainly benefit the wealthy. $70 billion of those tax cuts will be included in a fast track (reconciliation) bill Congress will take up later this fall.
Actions by the House were part of their goal to trim $50 billion from entitlement programs – programs such as Medicaid and Food Stamps that are automatically funded. The budget resolution for 2006 passed earlier this spring directed several House committees to cut $35 billion from programs under their jurisdiction as part of a budget reconciliation process. This week conservatives attempted to take a non-binding vote to increase cuts to entitlement programs from $35 billion to $50 billion, to eliminate a list of programs, and to impose across-the-board cuts on others. But Republican leadership lacked the votes to pass the measure, in large part because of an outpouring of opposition from constituents. However, even without a formal vote of the House, committees can go ahead and cut more deeply than originally required. And they proceeded to do so through the week of October 24.
Once committee action is concluded, the next step is for the committee bills to be packaged together and approved by the House budget committee next week (possibly November 3). The unified budget reconciliation bill is expected to be sent to the floor for a vote the week of November 7. Here is how the cuts were made:
MEDICAID – House Energy and Commerce Committee
Early Friday morning the House Energy and Commerce Committee approved a bill that cut $9.5 billion from Medicaid over the next five years. The bill changes Medicaid to make children, families, elders, and people with disabilities pay more and/or receive less. Those with incomes at or above the poverty level will for the first time be subject to pay for premiums if states choose to impose them. Unlike the Senate, the House did not consider cutting Medicare, although Chairman Joe Barton (R-TX) indicated that cuts to Medicare may occur in conference with the Senate.
• Except for children in families below the poverty line, pregnant women and a few others, the committee gave states the option to require Medicaid recipients to pay towards the cost of medical and prescription drug costs, up to 5 percent of their income. States will also gain the authority to restrict the Medicaid benefits package for some beneficiaries.
• The bill imposes many restrictions related to people transferring assets in order to qualify for Medicaid nursing home care, some of which may exclude people who are not sheltering assets.
• The bill provides 100 percent federal Medicaid matching payments to states for persons living in areas affected by the hurricanes.
FOSTER CARE – House Ways and Means Committee
While the budget resolution passed by Congress last May directed this committee to cut $1 billion, Chairman Thomas (R-CA) is complying with a House leadership push to cut far more – about $8 billion, the majority affecting low-income children, elders, and people with disabilities.
• Certain poor grandparents or other relatives caring for their relative’s children are the targets for the Ways and Means cuts. If those children are living with their poor relatives because they were removed from their parents’ home, a federal appeals court ruled that their relative caregivers’ low income should qualify them for federal foster care assistance. The Ways and Means cut would overturn this ruling by requiring the child’s eligibility to be based on the financial circumstances of their parents when they were living with them (even though that’s not where the child now resides).
• The bill also would limit foster care assistance to relatives by imposing strict licensing requirements on a fast timetable – those who couldn’t comply would lose support.
• Together, these cuts would amount to about $600 million over 5 years. The impact on families: in the nine states under the appeals court’s ruling (including California and other western states), some states may replace foster care assistance with smaller TANF payments. Other states may pick up all the foster care costs. The twin restrictions on relative care will result in some children being separated from their family members and placed in other foster care homes – a further disruption in the children’s lives.
SSI – House Ways and Means Committee
The House Ways and Means proposal would cut $730 million over 5 years by making poor seniors or people with disabilities wait longer for the Supplemental Security Income (SSI) payments they are owed. In effect, the federal government would force poor elderly and/or sick people to lend it money that will be used to pay for tax cuts for the well-heeled.
• SSI typically takes many months to approve new cases while applicants hang on, piling up bills with little or no other income coming in. Once approved, people now can receive a lump sum payment of up to 12 months of back benefits, helping them to pay off debt. The new proposal would only allow a lump sum of up to 3 months, with the rest paid out in installments.
• Part of the savings to the federal government will occur because some people will die and never receive the remainder they are owed. (In contrast to the proposal to eliminate the estate tax for the richest 1 percent of estates, poor SSI recipients would in death be taxed at 100 percent of their still-owed benefits.)
• Ironically, another Ways and Means proposal would increase the reviews of SSI applications, further delaying approval and increasing the amount that would be owed.
CHILD SUPPORT – House Ways and Means Committee
Child support payments lifted one million children out of poverty in 2002 and encourages work among single parents by providing an essential supplement to earnings. Every dollar invested in child support enforcement results in $4.38 in collections. Nearly $22 billion was collected in 2004 at a total cost of $5.3 billion. The Ways and Means bill cuts child support enforcement by nearly $5 billion over 5 years by steadily reducing the federal share of the costs.
• According to an estimate by the Congressional Budget Office, slashing this much from enforcement efforts will mean a 5-year loss of $7.9 billion in collections that would otherwise have gone to support low-income children. Over 10 years, the loss to children in single-parent families is estimated at $24.1 billion.
• The rationale for cutting is that the 66 percent federal share of enforcement costs (the rest paid by states) is higher than the match rates paid in other programs such as TANF or Medicaid. That is not uniformly true – the federal share of TANF and Medicaid costs can reach up to 80 percent. The current child support enforcement cost is a good deal for the federal government, because greater collections have saved billions in public assistance payments.
WELFARE and CHILD CARE- House Ways and Means Committee
The Ways and Means bill includes legislation to reauthorize Temporary Assistance for Needy Families and the child care block grant. The bill does not cover even the inflation costs of child care, much less the increased demands from the bill’s harsher work rules. That means in 2010 270,000 fewer children will receive child care assistance than in 2004.
• The bill claims to add a net $1 billion in TANF spending over 5 years. In reality, no money is added over current expenditures. The bill continues the $319 billion a year in existing supplemental grants to low-income states which are counted misleadingly as new money.
• The real new spending in the bill – a meager $500 million over 5 years for child care and $1 billion for marriage promotion activities – is paid for by eliminating current bonuses to states for high performance in job placement, retention, earnings, families’ access to certain support services, and reduction of out of wedlock births.
• Earlier versions of the House TANF bill included double the new child care funding (still inadequate) and reduced but did not eliminate the bonus for states’ welfare to work high performance. Even though the bill effectively reduces the resources states will have to help parents find and keep jobs, the bill ratchets up the work requirements – rising to 70 percent of the caseload required to work 40 hours a week while receiving assistance, while reducing access to vocational education and other services that would help parents leave assistance for work at real jobs with decent pay.
FOOD STAMPS – House Agriculture
The House Agriculture Committee began to mark up its bill on Friday, October 28. Chairman Bob Goodlatte’s (R-VA) bill cuts $884 million from Food Stamps . In total, the committee plans to cut $3.7 billion from all agriculture programs – more than the $3 billion they were instructed to cut by the budget resolution.
• The committee goes farther than President Bush’s proposed plans for Food Stamp cuts. The President proposed that 7 percent of the Agriculture Committee cuts come from Food Stamps. In contrast, under Chairman Goodlatte’s bill, Food Stamps bear 25 percent of the total cuts to the Agriculture Committee.
• The Committee’s bill goes along with a cut proposed by the Bush Administration that the Congressional Budget Office now estimates would exclude an estimated 225,000 people from the Food Stamp Program – mostly low-income families trying to make the transition to work.
• In addition, the bill will make legal immigrants ineligible for food stamps for seven years after entering this country legally, regardless of how poor they are. (Current law allows legal immigrants to receive food stamps after five years.) This change is expected to cut off benefits to an estimated 70,000 legal immigrants in an average month.
• The House Agriculture Committee took an approach dramatically different from its Senate counterpart. Senators found the need for Food Stamps so compelling that they rejected all cuts to the program. They were right – Food Stamps is an effective program that serves 25 million low-income Americans, including 13 million children, providing for basic nutrition at an average cost of less than $1 per meal.
STUDENT LOANS – House Education and Workforce
The House Education and Workforce Committee approved legislation to cut $15 billion from student loans. Student groups estimate the cuts will result in an average increase of $3,800 in students’ loan payments.