CHN: House Cuts $38.8 Billion from Budget; Slashes Health Care, Student Loans, Child Support and Help for People with Disabilities

Slashes Health Care, Student Loans, Child Support and Help for People with Disabilities; Reauthorizes TANF

By a vote of 216 to 214, the House of Representatives passed a bill that cut $38.8 billion from the federal budget on Wednesday, February 1. The pain of the cuts will be overwhelmingly borne by moderate- and low-income students, families, the elderly, abused and neglected children, and people with disabilities. All Democrats, one Independent and 13 Republicans voted against S. 1932:

Advocacy Efforts Paid Off

The vote came after months of intense lobbying and education work by advocates, service providers, students and others who decried the deep cuts and restrictive policy changes to Medicaid, student aid, child care, child support enforcement, Supplemental Security Income (SSI) for people with disabilities and Temporary Assistance for Needy Families (TANF). More than 300 events in districts around the country were sponsored by the coordinated efforts of the Emergency Campaign for America’s Priorities in the month of January alone. Members of the House of Representatives were bombarded with hundreds of thousands of calls from citizens over the last four months. Hundreds of groups around the country demanded – and got – meetings with their representatives to explain the harm the bill will cause to their communities.

These efforts were instrumental in persuading four Republican members who voted for the bill on December 19 to change their vote to “no.” The four members were Representatives Rob Simmons (R-CT), Jim Gerlach (R-PA), John Sweeney (R-NY), and Jim Ramstad (R-MN). Rep. Steve Buyer (R-IN) voted no in December but voted in favor of the bill on Wednesday. Two Republicans and one Democrat were absent.

The House approved a very similar version of the 774-page bill in the early morning of December 19 by a vote of 212 to 206 after having just hours to review it. Later that week the Senate approved the bill with minor changes. That action sent the bill back to the House. Because members of Congress had recessed for the year, opponents of the bill used the month of January to draw attention to egregious provisions that had been overlooked.

Although the legislation’s passage remains deeply disappointing to human needs advocates, the final bill reflects major improvements from the President’s original proposals and earlier Congressional versions. The bill does not include any cuts to food stamps or the President’s plan for a “superwaiver” which would have given states wide permission to waive rules and regulations for a variety of low-income services. The President had proposed at least $45 billion in cuts to Medicaid.

Bill Does Not Reduce Deficit

Conservatives claim S. 1932 was a necessary step to reining in out-of-control spending. But the misnamed Deficit Reduction Act of 2005 will actually increase the deficit because it is merely one half of a two-part package. The second part of the package – a tax reconciliation bill – reduces taxes (mostly for the well-off) by $70 billion. (See story below.) Coupled together, the budget cut bill and the tax cut bill will increase the deficit by more than $30 billion. In fact, Congress did not pass S. 1932 to cut government spending, but to help pay for (offset) additional new tax breaks.

Special Interests Win Out Over Ordinary Families

The final bill reflects the choice of Congress to protect special interests and big donors over families. Pressure from the managed care and pharmaceutical industries persuaded conference negotiators to drop provisions that would have saved money from Medicaid and Medicare programs – and instead placed the burden on low-income beneficiaries. The bill subjects students and parents to higher-than-market interest rates, with the federal government capturing the overpayments back from the lenders. Education and Workforce Committee Chairman John Boehner reassured banks that he would take care of them in the bill – which he did.

Medicaid: The bill cuts Medicaid by $27 billion over ten years by allowing states to reduce benefits and require poor mothers and children to pay more for their health care. Nearly all the 28 million children who now benefit from Medicaid may lose services and/or pay more than their families can afford. Comprehensive care that now effectively prevents and treats child health problems would no longer be assured, even for the poorest children, and many deserving elderly who have no options other than nursing home care will not be able to afford it. The nonpartisan Congressional Budget Office (CBO) estimates 13 million poor recipients would face new costs and 65,000 enrollees would lose Medicaid coverage altogether.

States would be required to demand proof of citizenship either through a birth certificate or a passport from all new and renewing Medicaid applicants. Many of the poorest citizens do not have such documents. One in five African Americans 60 years or older does not have a birth certificate.

The inclusion of the Family Opportunity Act is one bright spot in an otherwise mean-spirited bill. Under these provisions, potentially thousands of low- and middle-income families who cannot obtain private health insurance for their child with a significant disability may access the Medicaid program.

Child Support: Despite the success in the last decade of improving child support enforcement and collecting more payments owed to children, the budget bill cuts federal funding of enforcement activities by $4.9 billion over 10 years. As a result of this cut, at least $8.4 billion of child support will go uncollected.

Student Loans: The bill cuts $12.7 billion from student loan programs over five years. Up to 70 percent of the total cuts from education would directly affect student borrowers . College students will face higher fees and interest rates. Parent borrowers will also be charged higher interest rates.

Aid to Disabled: The bill cuts $425 million from cash aid for poor people with disabilities. Approving applications for Supplemental Security Income (SSI) for poor people with disabilities can take many months. Instead of receiving a lump sum payment for the benefits owed from the date of application, poor beneficiaries will have to wait much longer to collect what they are owed. In part, these provisions “save” money because some seriously disabled people will die before they receive their full benefits – a true death tax.

Temporary Assistance for Needy Families and Child Care: The bill reauthorizes the welfare-to-work program through 2010 and reduces some flexibility states now have in implementing their programs. The bill requires most states to make hasty increases in work participation — or face steep penalties. California’s Legislative Analyst’s Office has estimated that California will have to pay $445 million in penalties in 2009 and 2010, as the harsher provisions are implemented. On average, states will have to increase the number of families participating in work activities by 69 percent – an additional 236,000 families, with very little planning time and few resources. The Congressional Budget Office has estimated that the cost to states of meeting the new welfare to work requirements is $8.4 billion over 5 years. (Center for Law and Social Policy, .) The small increase in child care funding ($200 million a year) is inadequate to cover the increased work demanded of parents. Funding for child care is estimated to be so inadequate that 255,000 fewer children in working families will receive child care assistance in 2010 than in 2004.

Foster Care: The budget bill would reduce assistance to abused and neglected children by almost $1.3 billion over 10 years ($577 million over 5 years). This includes certain reductions to all states and specific cuts to services and benefits for relative caregivers in nine western states. Both cuts will limit access to foster care assistance by grandparents or other relatives. The bill restricts case management and planning to arrange for appropriate medical, mental health, educational, and other services. Although the bill includes some increases in child welfare spending, these are very small, and are far outweighed by these cuts.

For More Information

Washington Post: Budget Cuts Pass By Slim Margin:

CBPP: Budget Bill Shields Key Special Interests:

Budget and Appropriations
Budget Report 2012 - Self-Inflicted Wounds
Education and Youth Policy
Fact of the Week
Income Support
military spending
Our American Story
Policy Analyses and Research
SAVE State Fact Sheets: 2013
Social Services
Temporary Assistance for Needy Families