CHN: House Passes Budget Resolution

April 2, 2012

On March 29, 228 members of the U.S. House of Representatives voted to make most federal services disappear.  The resolution approved by the House Budget Committee passed the House 228-191, with no Democrats voting for it and 10 Republicans voting no.

In the relatively short term – over the next 10 years – the House budget (H.Con.Res. 112) would make very substantial cuts to almost every government program except defense.  The thrust of the budget is to terminate open-ended federal commitments to meet need.  Medicaid and SNAP/food stamps would be turned into block grants, thereby providing limited funding to states that would not grow to match increased need during a recession or to keep pace with an aging population.  Beyond that, Medicaid and SNAP would face big cuts:  $810 billion for Medicaid over 10 years, and $134 billion for SNAP.  By 2021, according to an Urban Institute analysis of last year’s similar House budget plan, the Medicaid cuts would be so severe that if applied solely by reducing caseload, between 14 and 27 million people would be dropped from the program.

The budget cuts Medicare by raising the eligibility age from 65 to 67, and by changing to a system of “premium supports” – that is, providing vouchers so seniors can purchase insurance.   These vouchers would not be enough to keep up with the cost of insurance, and so would result in shifting the burden of health care costs from the federal government to seniors.    The budget also would repeal the Affordable Care Act, which would deny health coverage to over 30 million uninsured people.  Beyond that, the House budget cuts a whopping $1.9 trillion from mandatory programs other than health care over the next decade.  In addition to the SNAP cut cited above, these cuts would come from programs like Supplemental Security Income (SSI, the program for poor elders and people with disabilities), farm subsidies, unemployment insurance, refundable tax credits like the Earned Income Tax Credit and Child Tax Credit, Temporary Assistance for Needy Families (TANF), and Pell Grants.

Finally, the budget cuts more deeply into appropriations other than defense than last August’s deficit reduction legislation calls for, with the cuts growing over time.  In the first year, the House budget cuts less than that law requires, but by 2021, the cuts would be 23 percent deeper.

Defense, on the other hand, grows.  Starting in FY 2013, its funding is 5 percent higher than the limits required by the deficit reduction law (the Budget Control Act).

Over a longer period, the budget plots an even more extreme course, with reductions growing decade by decade.  By 2050, according to the Congressional Budget Office and analyses by the Center on Budget and Policy Priorities, Medicaid, the Children’s Health Insurance Program, and whatever is left of the Affordable Care Act would be cut by at least 75 percent below what current law would provide.   CBO estimates that appropriations (aka “discretionary” funding) would decline from 12.5 percent of GDP in FY 2011 to 3.75 percent in 2050.  Because defense has never been less than 3 percent of GDP and is protected in the budget, there would be almost no money for any appropriated program other than defense.   So the majority who voted for this resolution would set in motion massive reductions and terminations for education, environmental and consumer protection, housing, transportation, child care, nutrition, health care and health research, mental health and substance abuse treatment, child welfare services, and much more.
Despite the massive cuts, the House Budget Resolution does not balance the budget until 2040.  It takes so long because the budget cuts taxes massively.  In addition to continuing all the Bush tax cuts ($5.4 trillion over 10 years), the budget adds another $4.6 trillion in tax cuts that overwhelmingly favor the top 1 percent.  The annual tax break for millionaires has been estimated at from $187,000 to $265,000 from the new tax cuts, in addition to the yearly $129,000 they already get from the Bush-era breaks.  In addition, corporate tax rates would be slashed.

House Budget Committee Chairman Paul Ryan (R-WI) asserts that the new tax cuts will be paid for by cuts to other tax expenditures – that is, the deductions and credits that make up so much of the tax code.  But while the budget is fairly specific in recommending cuts to services, it is utterly silent on which tax expenditures it would end.  Deductions for mortgage interest? state and local taxes?  401(k) contributions? charitable giving?  employer contributions to health insurance?  Mum’s the word.  These and more tax breaks would have to be eliminated altogether to pay for the tax cuts proposed in the budget.  The unlikelihood of this outcome pushes this part of the budget into the realm of make-believe.  Without the mystery offsets, budget deficits will remain, even though services have been slashed.

The slow pace of deficit reduction frustrated the even more right wing Republican Study Committee, which produced its own alternative budget resolution, cutting still more deeply.  The Republican Study Committee budget failed 136 to 285, with 104 Republicans plus 181 Democrats opposing it.

The House Budget Committee Democrats produced their own alternative, which closely tracked the President’s budgetproposal.  It failed 163-262, largely along party lines, although 22 Democrats voted no, mostly but not all of them moderate to conservative.

The Congressional Progressive Caucus put forth A Budget for All, a plan that increases job-creating investments substantially more than the President’s budget while still reducing the deficit more swiftly than the House majority plan through substantial tax increases from fair sources and cuts in military spending.  This substitute failed 78-356.

The House Budget Resolution is not expected to move further, because the Senate will not take it up.  But its provisions and others raised during floor debate will continue to be significant.  The lower appropriations total approved in the budget ($1.028 trillion for FY 2013) will be the basis for spending bills that must emerge from the House.  The Senate has committed to spend the higher amount enacted in the Budget Control Act ($1.047 trillion), which will complicate agreements on appropriations.  Both the budget that passed and the substitutes that did not include alternatives to allowing the automatic cuts to take effect starting in January 2013.  The House budget would spare military spending at the expense of domestic and international programs.  Human needs advocates are gravely concerned that the automatic cuts to come will cut many low-income programs by 20 percent or more when compared to FY 2010 including job training, WIC, housing, and much more.   If these cuts are made worse, and/or are combined with reductions to vital programs like Medicaid or SNAP to prevent military cuts, the outcome will be harsh both for vulnerable people and for our economy’s slow progress.

For more information about budget proposals and the impact of the automatic cuts, see the Coalition on Human Needs’ new report, Self-Inflicted Wounds.

Categories: Budget and Appropriations