President Proposes Significant Transformation of Social Safety Net
On February 3, President Bush unveiled a $2.23 trillion budget proposal for fiscal year 2004 that boosts military spending and advances tax cuts for the wealthy, while seriously undercutting social programs that aid low-income Americans. In fact, analysts have characterized the impact of Bush’s budget request on social safety net programs as unrivaled in scale and scope. Not only is Bush calling for drastic cuts in some anti-poverty initiatives, he is proposing shifting authority over major programs benefiting poor and vulnerable people from the federal government to the states.

Under such a shift, federal standards for programs would be loosened, allowing states significant discretion to implement safety net programs as they see fit. Rather than receiving federal payments based on caseload levels, states would receive a fixed block grant to operate various programs. Affected programs include Head Start, Medicaid, SCHIP, and Section 8. The nation’s welfare system was similarly “devolved” to the states as a result of changes to the law made in 1996.

In terms of Medicaid and SCHIP, the President’s budget offers a slight increase in funding initially, but would significantly reduce federal aid for the program in the long run. In addition, the President proposes rescinding rules that protect people enrolled in the programs by states’ choice rather than federal law. As a result, millions of beneficiaries could be subject to higher health care costs, receive fewer benefits, or become ineligible for Medicaid coverage.

Similarly, the administration wants to transfer authority over the Head Start program to the states, which would eviscerate the federal performance standards that ensure the program’s success. Furthermore, the President proposes a funding level for Head Start that barely covers the cost of inflation, and would freeze childcare spending and cut after school programs.

The President’s budget also advocates converting the Section 8 program, which provides subsidies to low-income families to help them pay rent, to a state-run block grant. Housing advocates caution that many states are ill equipped to run housing programs and worry that some will deny poor families assistance. In addition, the administration seeks an increase in the Public Housing Operating Fund of just $44 million – a sum that is, according to advocates, far shy of the $250 million “accounting error” that led HUD to cut public housing agencies’ funding by at least 30% in fiscal year 2003.

Also included in the Bush budget is a $400 billion overhaul of Medicare. Under the President’s proposal, a prescription drug benefit would be extended to seniors – but only to those who leave the traditional fee-for-service Medicare program and join a private health plan.

Department of Labor programs are also targeted for cuts and, in some cases, elimination. The administration would terminate the Migrant and Seasonal Farmworkers Program and the Youth Opportunity Grants Program, while freezing funding for adult and dislocated workers. Overall, spending on job training programs would be cut by nearly $145 million in fiscal year 2004. In terms of unemployment insurance, the budget would reduce employers’ federal payroll taxes and shift administrative costs for the program to the states.

In addition, President Bush’s budget blueprint calls for tightening eligibility rules for the Earned Income Tax Cut (EITC) and free and discounted meals for school children. The administration argues that people are using these programs improperly and, therefore, these changes – which could result in the denial of assistance to millions of eligible families – are justified.

The White House is touting the boost in funding provided for some education programs in its 2004 budget. While the budget does contain $1 billion increases for Title 1 and special education programs, it falls $6.2 billion short of the $18.5 billion authorized under the No Child Left Behind Act – the new education law championed by President Bush. Furthermore, the budget proposes paying for these funding increases by eliminating 45 other education programs, including those that provide college loans and grants and establish school technology centers. The budget also contains $756 million for school vouchers, which drain money away from public schools.

At the same time President Bush is advocating changes to anti-poverty programs that have the potential to radically undermine the social safety net, he is asking Congress to approve almost $1.5 trillion in tax cuts that would primarily benefit the wealthy. According to the Administration, these tax cuts will do more to assist the poor than social programs because they will lead to investments that spur economic growth, creating jobs and raising wages.

Economists warn that the proposed tax cuts will do nothing to stimulate the economy but will sharply worsen the nation’s deficits. Just two years after inheriting surpluses, the Bush White House admits the nation will face record deficits over the next few years. Democrats have pledged to fight the Bush tax cut plan as well as the proposed changes to safety net programs. Anti-poverty advocates are also vigorously working to block the President’s tax and spending proposals.

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