CHN: House Budget Committee Targets Human Needs Programs for Cuts

Despite growing calls to prevent cuts in health, education, and other domestic programs, the House Budget Committee approved a FY 2007 budget resolution that is close to $10.3 billion short of the cost of providing this year’s level of services for annually appropriated (discretionary) programs. Over five years, the cuts to the annually funded programs would swell to $167 billion.
The budget passed by the Committee on March 29 differs markedly from the version adopted by the Senate on March 16. The Senate provided a little more than the amount needed to prevent cuts in services to discretionary programs in FY 2007, while the House Budget Committee would require almost the same deep level of cuts as in the President’s budget. The Senate declined to force more cuts in entitlement programs (such as Medicaid, Medicare, Food Stamps, etc.) through the filibuster-proof reconciliation process. The House Budget Committee calls for $6.8 billion in entitlement cuts through this fast-track approach.

Both the House committee’s draft and the Senate budget resolution include substantial tax cuts ($228 billion over five years). As in the current year’s budget, service cuts pay towards the cost of tax breaks that are a boon to the wealthy.

The budget resolution is now headed to the House floor. If the controversies swirling around it can be resolved, it is expected to reach the floor by the middle of the week of April 3.

Annually Funded/Discretionary Programs

The budget resolution is an outline of spending; it does not give program-by-program details. But if the total is too low to support the services provided by all the programs this year, it is clear that when the details are worked out by the appropriations committees, there will be cuts. If certain popular programs receive increases, other programs will be cut more deeply. The House Budget Committee adopts the President’s total for discretionary programs, a figure that will require reductions in services.

Domestic discretionary programs include education, job training, social services, housing, Head Start, and Women, Infants and Children (WIC) nutrition aid, among many others.

House Moderates Unhappy With Deep Cuts

Recognizing the inadequacy of the Committee’s figure for discretionary spending, more than two dozen moderate Republican House members have made statements indicating they may vote against a budget that does not prevent cuts in services. Under the leadership of Representatives Nancy Johnson (R-CT) and Fred Upton (R- MI), 23 signed a letter to Speaker Hastert (R-IL) calling for a 2 percent increase in ”non-security, non-emergency discretionary appropriations” over the FY 2006 level. That would amount to about $8 billion, and added to the $381 billion proposed by the House Budget Committee, would come close to (but not quite reach) the cost of continuing services as this year’s levels. (The letters’ signers were all Republicans: Boehlert (NY), Castle (DE), Emerson (MO), Gerlach (PA), Gilchrest (MD), N. Johnson (CT), Kuhl (NY), LaHood (IL), LaTourette (OH), Leach (IA), McHugh (NY), Ney (OH), Platts (PA), Porter (NV), Ramstad (MN), Renzi (AZ), Schwarz (MI), Shays (CT), Simmons (CT), Upton (MI), C. Weldon (PA), Whitfield (KY), and Wilson (NM).)

Another bipartisan letter called for the preservation of the Commodity Supplemental Food Program, which provides 420,000 elders and 50,000 women and young children with modest food packages. The President’s budget proposed to eliminate this program altogether. This letter was sent to the Chair and Ranking Member of the House Agriculture Appropriations Subcommittee, and was signed by 111 Democrats and 11 Republicans.

In addition, Rep. Castle held an event with at least 200 service providers, advocates, educators, and others to announce he would vote against a budget that included cuts in domestic programs and would encourage others to do so as well.

Pressure Building to Make Deals

If all those who signed letters opposing cuts joined with the Democrats in voting against the budget, it would not have the votes to pass. But pressure is intensifying to work out a deal that garners the votes of enough moderate and conservative Republicans. It is reported that conservatives are considering trading their votes for a budget that does not cut as much as they would prefer in exchange for a separate vote on budget process changes that would make it easier to shrink spending (see line item veto article in this issue). The House leadership is also wooing moderates, trying to come up with a way of adding funding for domestic appropriations without raising the overall total. Unless the deal involves taking billions of dollars away from defense spending, any promise to add to domestic funding without increasing the total is hollow. The Budget Committee added $16.5 billion above inflation-adjusted FY 2006 levels to defense spending; it is hard to imagine that they will eliminate half of this increase to prevent domestic cuts. Advocates are very concerned that moderates will succumb to pressure and back a deal that only appears to add funds Â- but that in fact will still result in lost services.

Entitlement Spending

Entitlement programs do not need annual appropriations Â- if Congress wishes to reduce spending in programs including Medicaid, Medicare, Food Stamps, student loans, unemployment insurance, etc., it must change the laws that govern eligibility, benefits, and/or costs. The House Budget Committee would require such changes in law to take place by directing committees to come up with $6.8 billion in cuts through a reconciliation bill. This has particular bearing on the Senate, because its rules for considering reconciliation legislation include limits on debate that prevent filibusters. That means only a simple majority is needed to enact the cuts, rather than the 60 votes needed to close down a filibuster. The Senate chose not to enforce cuts in entitlement programs through reconciliation legislation, but the House Budget Committee hopes to change the Senate’s mind in negotiations over the final resolution.

Although the House Budget Committee has stated that it does not intend to cut Medicare or Medicaid, it does not include funding increases sought by the President that would close a gap in funding of the State Children’s Health Insurance Program (SCHIP) and continue Transitional Medical Assistance (TMA, which allows families who have moved from welfare to work to continue to receive Medicaid for up to a year). Without increasing funds for SCHIP, the Congressional Research Service and Center on Budget and Policy Priorities estimate about 500,000 children will lose SCHIP medical coverage next year. In addition, hundreds of thousands of parents and children will lose Medicaid coverage if TMA is not continued.

Of the $6.8 billion sought over five years from entitlement (mandatory) programs, the largest single slice is $4 billion sought from programs under the jurisdiction of the House Ways and Means Committee. The drafters of the budget resolution assume that a small portion of the $4 billion will come from addressing fraud in unemployment insurance claims; they may also expect some savings from trade-related provisions. However, the budget resolution cannot dictate to committees how they are to achieve the cuts required. The Ways and Means Committee has jurisdiction over Medicare, Supplemental Security Income, child welfare services, Temporary Assistance for Needy Families, child support enforcement, and the Earned Income Tax Credit Â- the committee is free to make cuts in any of these areas if it chooses.

The second-largest cut required in entitlement spending would come from programs covered by the Education and the Workforce Committee – $1.3 billion. The Budget Committee assumes the savings will come from increased premiums paid by employers under legislation to shore up private pension funds. $500 million in savings is also sought from the Judiciary Committee, perhaps in part from increased fees for visas.

Tax Cuts

The $228 billion for five years of tax cuts proposed in the House Budget Committee’s resolution is expected to cover extending all of the tax cuts enacted since 2001 through 2011, and to cover other tax breaks routinely extended. The resolution does not include the President’s new tax breaks for Health Savings Accounts (the President’s budget assumed $282 billion in tax cuts). The budget does not include the full cost of relief from the Alternate Minimum Tax over five years, so certainly understates the total likely cost of tax breaks over that period.

Neither House nor Senate would give the tax cuts the added protection of the reconciliation process, meaning that passing the tax cuts would require 60 votes in the Senate.

Center on Budget and Policy Priorities: House Budget Committee’s New Plan:

Center on Budget and Policy Priorities: Senate Budget Committee’s New Plan:

Policy Analyses and Research