CHN: President Releases Fiscal Year 2005 Budget

February 13, 2004

On February 2 the President released his $2.4 trillion budget for Fiscal Year 2005. The budget the President proposed shortchanges working families across the country. Overall, domestic programs subject to annual appropriation that are not related to defense or homeland security are nearly level-funded. The budget shrinks or eliminates the federal commitment to programs that serve the most vulnerable Americans, but maintains tax cuts that benefit the wealthiest Americans. The budget offers no real relief for the more than 40 million who go without health insurance or the 8.4 million without jobs.

Makes Severe Cuts to Human Needs Programs
In broad strokes, the budget:

  • Zeroes out funding for 65 programs in FY 2005, including migrant and seasonal farmworker training, juvenile justice accountability incentive block grants, empowerment zones in urban and rural areas, the community food and nutrition program. The budget also eliminates $1.4 billion in education programs.
  • Makes shockingly deep cuts in housing vouchers (in FY 2005 alone, inadequate funding could slash the number of families receiving housing vouchers by up to 250,000);
  • Proposes to dismantle the current guaranteed funding from the federal government to states for the Medicaid and State Children’s Health Insurance programs and replace it with more limited funding and responsibilities;
  • Repeats proposals to further shrink the federal role by turning authority, but not enough money, over to states to run child welfare, subsidized housing, Head Start, and other programs;
  • Freezes funds for child care and the Temporary Assistance for Needy Families (TANF), the federal welfare to work program. Inflation coupled with the growing need for these services mean that level funding is really a cut; and
  • Continues to underfund Title I education for the disadvantaged by more than $7 billion below what the President promised in his own education reform bill, the No Child Left Behind Act.

    The full list of cuts and freezes to other human needs programs is far longer. The Coalition on Human Needs will be distributing a fuller analysis next week. Read the story below for more information about the budget campaign that CHN is launching in response to the President’s 2005 budget. For links to specific information about the budget proposal’s impact see below.

    Caps Spending in the Future
    The profound concerns about this budget do not stop with cuts and policy changes proposed for the next year. In order to cut the deficit in half by 2009 while continuing and even increasing tax cuts, the budget contains drastic cuts after 2005 in dozens of human needs programs. Many of these are cuts are in programs not cut in 2005, such as Title I education and the Low-Income Energy Assistance Program. Unlike typical presidential budgets in the past, the printed documents released on February 2 do not provide detailed information about spending levels after FY 2005, thus hiding the severity of future years’ cutbacks. Tables were made available from the Office of Management and Budget that are now on the website of OMB Watch

    Some of the bad news:

  • The Center on Budget and Policy Priorities estimates that by 2009, total funding for domestic discretionary programs outside homeland security would be $50 billion (11.5 percent) below the 2004 level, adjusted for inflation.
  • Housing vouchers under the Section 8 program could be cut by up to 800,000 families in FY 2009 – four in 10 of all families currently receiving vouchers. According to the Center on Budget and Policy Priorities, this is the deepest cut proposed for housing vouchers in the program’s 30-year history.
  • By FY 2009, the number of children who could be cut from child care assistance could be as many as 365,000.
  • The WIC program (nutrition assistance for pregnant women, infants, and young children) will be cut $308 million below the Administration’s own estimate of what it would take to maintain current service levels in FY 2009.
  • Various discretionary social services programs, including child welfare and services for the elderly, will drop $816 million below the cost of current services in FY 2009 (again, according to the Administration’s own estimates).

    Proposes Draconian Budget Rules
    The President also proposes to change budget rules by capping spending so that any increase must be offset by cuts elsewhere. The budget rule proposal does not require the cost of additional tax cuts to be made up by other tax increases or spending cuts. If approved, advocates will find that increases in defense, homeland security, or other high-profile programs are likely to mean cuts in services that low-income people need. Campaigns to prevent such cuts will be a very uphill climb.

    Such a rule increases the incentives for Congress to make additional tax cuts and reduces the incentives for increased spending. Congress may need little encouragement along these lines. With the budget deficit projected to exceed $500 billion next year, some Congressional leaders have been talking about cutting more deeply into services. There has not been much talk among the leadership about raising more revenues. House members of the Republican Study Committee (conservatives) and the Republican Tuesday Group (moderates) released a joint set of budget rules proposals on February 11 intended to restrain spending. Similar to the Administration’s proposals, they also require spending increases to be offset by cuts, and would make the congressional budget resolution a binding document, rather than a blueprint for later action, as under current law. If spending proposals were to exceed the limits set in the budget resolution, reductions in mandatory and discretionary programs would be automatic (except for Social Security and Medicare). It is not clear how or when these budget rules proposals will be taken up.

Categories: Budget and Appropriations