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.

House Presses for Even Larger Cuts to Low-Income Services(10/14/05)

In the coming weeks, the House of Representatives will be pushing a new plan to cut at least $50 billion – and possibly more - from services that mostly help low-income and vulnerable people.

Less than two months ago hurricane Katrina swept the Gulf Coast, revealing the calamitous consequences of failing to invest in communities and people. President Bush addressed the nation on September 15 from New Orleans, noting the “deep, persistent” poverty of the region and said, “We have a duty to confront this poverty with bold action.”

Instead of “bold action,” conservatives in Congress are pushing ahead with business as usual -- with cuts to services for poor people and new tax breaks for the wealthy. Instead of expanding opportunities or providing health care, nutrition assistance or employment opportunities to those who need it most, the House and Senate will be moving ahead as early as next week with legislation that cuts Food Stamps and Medicaid.

The budget resolution approved by Congress in the spring called for $35 billion in cuts over five years to services that mostly help low-income families. The cuts will come from mandatory programs (sometimes called entitlements) such as Medicaid, student aid and Food Stamps. Temporary Assistance for Needy Families (TANF), the Earned Income Tax Credit (EITC) and Supplemental Security Income (SSI) for people with disabilities may also be at risk. The budget resolution also called for $70 billion in new tax breaks that will primarily benefit the wealthy.

The $35 billion in cuts now appears to be only a starting point. Next week the House may consider amending the budget resolution to make at least $50 billion in cuts. (For the moment, the Senate is sticking with the $35 billion target.) In addition, Congress may consider an across-the-board cut to all discretionary programs (those that must be funded annually -- see related story, this issue.)

To accomplish the $35 to $50 billion in cuts, Congress will use a technique called reconciliation. Various committees will pass legislation cutting from programs under their jurisdiction. For example, the Senate Agriculture committee is expected to pass a bill next week that will change eligibility requirements of the Food Stamp program resulting in a nearly $600 million cut, expected to affect 200,000 people. Once committees have passed their separate bills, the Budget Committee will package them together into a single bill that will be sent to the floor for a vote. In the Senate, a reconciliation bill requires just 51 votes for passage.

The original deadline Congress set for itself to make cuts was mid-September. The Senate has put off that deadline to the end of October and the House will take at least one week longer to make the cuts. Votes on the floor are expected in late October or early November, but that timeline could slip.

Later in the fall the House and Senate plan to pass legislation with $70 billion in new tax breaks over five years. An important piece of the tax cut package is expected to be an extension of the capital gains and dividend rate reductions, which are supposed to expire in 2008. The Center on Budget and Policy Priorities predicts 53 percent of the benefits from that tax break will go to millionaires (the top 0.2 percent of taxpayers.)

Ostensibly, the House is calling for deeper cuts to services in order to pay for the cost of recovery. But many observers say “how to pay for the cost of Katrina” is the wrong question. The budget resolution approved by Congress actually increases the deficit by $35 billion (spending for low-income services is reduced by $35 billion but new tax breaks will cause the government to lose $70 billion in revenue.) The tax breaks of 2001 and 2003 are costing the federal government more than $225 billion this year alone in lost revenue.

Several Senators and members of the House have admitted that figuring out where and how to cut services will not be easy. Human needs advocates are planning massive call-in days on October 17 and 18 to tell Senators and Representatives to abandon their plans for service cuts and tax breaks. Last week more than 750 organizations in all 50 states signed a letter calling on Congress to discard its plans to cut services for the needy while passing more tax breaks for the wealthy.