Deficit reduction over the next decade is the law of the land. Differences among Republicans and Democrats over how to do it have revealed starkly different priorities. There is bipartisan opposition to the across-the-board cuts in appropriations scheduled to take place starting in January 2013. The proposal being readied by the House leadership to replace these cuts shows these priority differences in the extreme. While the President would replace the automatically triggered defense and domestic cuts with a package dominated by revenue increases, modest defense cuts, and health care savings, the House Republicans continue to reject any new revenues, would increase military spending, reduce federal employees’ benefits, and propose large cuts with a direct impact on people using SNAP/food stamps, Medicaid and the new health care law, and other programs of importance to low-income people.
The House-passed Budget Resolution included instructions to six different House committees, requiring them to come up with gross savings of more than $331 billion over ten years, or, when overlap among the committees is taken into account, net savings of $261.5 billion. A portion of these cuts would replace some of the reductions scheduled to start in January 2013. The committees were given April 27 as the deadline for meeting the targets shown in the table below (these instructions are under a budget procedure known as reconciliation). Each committee approved at least as much in cuts as they were required to. The next step is for their proposals to be packaged together into one piece of legislation by the House Budget Committee, which is expected to take that action on May 7 (H.R. 4966, the Sequestration Replacement Act of 2012). This bill is expected to reach the House floor later that week.
Although the reconciliation cuts extend through 2022, the instructions only specify that a portion of the first year of a ten-year total of $1.2 trillion in deficit reduction is replaced. The Budget Control Act, enacted last August, calls for nearly $110 billion a year in cuts starting next January. Half of the cuts must come from defense programs (about $55 billion); a like amount is divided between $38.5 billion from domestic or international appropriations and the rest from non-exempt mandatory programs, including limited cuts to Medicare. The reconciliation instructions call for replacing all of the appropriations cuts in FY 2013 (defense, domestic, and international) as well as a small amount of mandatory defense spending. The rest of the scheduled FY 2013 cuts in mandatory programs not already exempt (such as limited cuts to Medicare and student loan fees) are not replaced, and all of the remaining years of reductions to defense, domestic, and international appropriations and other spending will stand, at least for now.
Republican opposition to defense cuts and tax increases has been explicit (the House has voted to increase the defense budget and to cut taxes still more deeply over the next decade, with the tax benefits going mainly to those with high incomes). Instead, cuts will reduce or eliminate nutrition aid, health coverage, tax credits for poor children, protections against abuse or neglect of children and senior citizens, consumer protection, and federal workers’ benefits.
Among the cuts directly affecting low-income and vulnerable people:
Millions of people will lose SNAP/food stamps: The House Committee on Agriculture was required to find savings of $33 billion over ten years. They exceeded their target by about $2.6 billion, and made all the cuts to the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps). Unlike the Obama Administration’s budget and the Bowles-Simpson deficit reduction plan, there is no attempt to cut farm subsidies, nearly three-quarters of which go to large, profitable farms. The SNAP cuts in the reconciliation bill would reduce benefits starting in September 2012 by $57 a month for a family of four, by speeding up the termination of a benefit increase that was passed when the Great Recession took hold. The bill also would deny SNAP altogether to 2 million people, mostly seniors and working families with children, whose eligibility is now synchronized with programs such as the Low Income Home Energy Assistance Program or Temporary Assistance for Needy Families. Because children in families receiving SNAP benefits also qualify automatically for free school meals, it is estimated that 280,000 low-income children will lose these free meals when their families lose SNAP eligibility. In addition, the House Agriculture Committee recommends cutting federal funding for employment and training programs for SNAP beneficiaries by 72 percent (the cuts will also slash work supports like child care and transportation subsidies). (Click here to see the Center on Budget and Policy Priorities, House Agriculture Committee Proposal Would Cut 2 Million People off Food Stamps, Reduce Benefits for More Than 44 Million Others).
Millions of poor children will lose the Child Tax Credit: The House Committee on Ways and Means was required to cut $53 billion over 10 years. They also exceeded their target, with $7.8 billion of their goal met by denying the Child Tax Credit to working poor immigrant families that use Taxpayer ID numbers instead of Social Security Numbers when they file their taxes. Immigrant families with incomes averaging $21,000 a year will see their taxes rise by about $1,800.
Millions of low-income families with children, seniors, and people with disabilities will be hurt by the permanent termination of the Social Services Block Grant: This $1.7 billion funding source gives states flexibility to serve seniors and children who are victims of abuse or neglect, to provide meals on wheels to seniors, or to supplement scarce funding for child care. SSBG has been accused of being “duplicative” of other programs. In vital areas, including adult protective services for 579,465 seniors in 2009, this is not the case. The core protective services of investigations, interventions, and shelter are not funded by the Older Americans Act. States also use these funds for foster care services for more than 451,000 children, some of whom are not eligible for such services under Title IV-E of the Social Security Act.
350,000 people will lose Affordable Care Act premium subsidies: Under the House Ways and Means Committee’s proposal, families that received a higher premium subsidy than they would be entitled to based on their full year’s income will have to return the entire overpayment, even if they were eligible for the subsidy at the time it was made. For example, if an individual were unemployed for some months and qualified for a higher subsidy at that time, and then later found work, that person would not only have to start paying a higher premium when their income rose; they would have to return the subsidy they received earlier in the year. The Joint Committee on Taxation estimates that 350,000 people will forego coverage rather than risk having to pay back potentially thousands of dollars, just at the time when they are digging out from borrowing or unpaid bills from their period of joblessness. Because the people who decide to do without coverage will tend to be healthier, this proposal will threaten health care reform by making the pool of insured people sicker and more expensive. (See letter to the House Committee on Ways and Means by the Coalition on Human Needs)
Poor people in Puerto Rico and other U.S. territories will see a $6.3 billion cut in Medicaid between 2011 and 2019: The Affordable Care Act addressed an inequity in previous Medicaid law, under which Puerto Rico and the other territories received far less than what states receive for Medicaid services, despite much deeper poverty in Puerto Rico. The House Energy and Commerce Committee would do away with the Affordable Care Act’s additional funding, even though in 2010, Puerto Rico only received 35 percent of its Medicaid costs from the federal government (and that was higher than usual because of the temporary extra Medicaid dollars through the economic recovery legislation). Puerto Rico alone will lose $5.5 billion through 2019. (See Center on Budget and Policy Priorities, House Bill Would Cut Medicaid Funding for Puerto Rico by About $5.5 billion through 2019, by clicking here)
Millions receiving health care through Medicaid and the Children’s Health Insurance Program would lose coverage by the repeal of the “maintenance of effort” requirement for states: The Affordable Care Act required states to continue the same eligibility standards in effect when the law was passed through 2014, to prevent states from reducing their costs either by denying eligibility outright or by creating requirements (such as more frequent documentation requirements or in-person meetings) that are hard for poor and/or working people to comply with.
Affordable Care Act Prevention and Public Health Fund Eliminated: The House Energy and Commerce Committee would wipe out the remaining $10 billion in the fund over ten years ($5 billion of its original $15 billion was already grabbed to pay for part of the payroll tax cut extension in February). This is part of the House majority’s ongoing effort to defund and repeal the Affordable Care Act.
Consumer Financial Protection Bureau Funding Capped: The Financial Services Committee met its reconciliation target in part by denying the new Consumer Financial Protection Bureau the independence and significantly higher funding it is now scheduled to receive under the Dodd-Frank financial regulation bill. Under existing law, the new Bureau is funded through the Federal Reserve. This proposal would make the Bureau subject to annual appropriation, with its budget capped at $200 million. Since this is estimated to save $5.4 billion over 10 years, the budget cap would appear to severely curtail the agency. The Consumer Financial Protection Bureau will regulate many lending practices of particular importance to low-income people, such as pay-day loans and charges for debit card and ATM transactions.
(source: House Budget Committee Democratic Staff)
Categories: Budget and Appropriations