This Week In The Other America

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May 02, 2005

The other shoe falls

TWitOA returns from a longer-than-anticipated hiatus this week, and just in time. On Thursday, Congress passed a budget bill reconciling the two different versions passed by the House and Senate back in March. And though the news media, no doubt distracted by President Bush going on TV to natter yet again about privatizing Social Security, generally treated the budget news with little more than a yawn - my local newspaper, New York Newsday, ran only a brief wire story somewhere around page 20 - this is a big deal indeed for anyone who uses public services like Medicaid, food stamps, college loans, Amtrak, or a whole slew of other programs that now face drastic cuts.

What Congress passed last week was what's known as a "budget reconciliation" bill - which, as you'll recall from our discussion here back in March, involves setting broad spending limits for various government agencies, with the specific cuts to be pushed through later in a streamlined process that doesn't allow for Senate filibusters. When last we left Congress, the House had essentially rubber-stamped the president's package of tax and spending cuts (except for defense spending, of course, which would continue to rise well above the rate of inflation), while the Senate had restored several billion dollars in Medicaid cuts that the House (and Bush) had wanted, while tacking on even more tax cuts.

The two bills then went to what's known as a "conference committee" of House and Senate members, which haggled for a while, and then essentially split the baby. As Jim Horney of the Center on Budget and Policy Priorities wrote in his same-day analysis of the resulting bill:

The entitlement cuts to be achieved in the reconciliation bill — $35 billion over five years — are slightly more than twice as large as the $17 billion in reconciled cuts in the Senate-passed budget and about half the size of the reconciled cuts in the House budget. House and Senate committees are to report legislation to achieve these entitlement cuts by September 16.

The reconciled tax cuts — $70 billion over five years — are to be achieved in separate legislation that the House Ways and Means and Senate Finance Committees are directed to report by September 23. Evidentially, the two reconciliation bills are to be considered separately to obscure the fact that the cuts in entitlement programs, including significant cuts in programs that serve vulnerable, low-income families and individuals, are being used to offset a portion of the cost of tax cuts primarily benefiting high-income taxpayers. (There is no procedural reason that entitlements and taxes cannot be dealt with in a single reconciliation bill, as was common from 1982 through 1993.)

Splitting up debate over tax cuts and spending cuts may not seem like a huge deal, but it is. Traditionally, one way for members of Congress to get new programs funded during times of a spending crunch is to make them "revenue-neutral" - that is, link the new spending with a new source of government revenues, so that the bill pays for itself. Under the budget reconcilation process, though, that won't be possible - anyone who tries to suggest "let's restore spending and pay for it by getting rid of this tax cut" will be hastily dismissed as out of order, since tax cuts and spending cuts must never be discussed in the same room. It's a maneuver that is as brilliant as it is chilling, because the effect is to lock in a massive transfer of money from government programs to tax cuts - which, given who benefits from the one and the other, means a massive transfer from the poor to the rich.

As for what will be cut, that's another clever maneuver, because we don't know - last week's budget only sets overall spending levels, with the details of who gets cut and by how much still to be determined. (This is likely one reason why many of the headlines instead focused on the part of the bill that would legalize oil drilling in the Arctic National Wildlife Refuge, since that's at least a known quantity.) As discussed here previously, Medicaid will almost certainly take a huge hit, and food stamps, traditionally one of the most popular of anti-poverty programs, could be in danger as well.

And that's just the entitlement cuts - which in federal budgetese refers to programs that are parceled out by pre-established formulas, not voted on each year. Those subject to annual votes are known as "discretionary" programs, and these would be slashed at virtually an identical rate to what Bush proposed back in February. Back to the CBPP's Horney:

The conference agreement sets the total level of funding for annually appropriated (discretionary) programs in 2006 at $893 billion. This figure exactly equals the $843 billion proposed in the President’s budget, plus $50 billion in 2006 supplemental funds for Iraq and Afghanistan. (The President’s budget included no funds for Iraq and Afghanistan in 2006 or subsequent years, but the President clearly plans to request such funds at a later date.)

The conference agreement assumes that funding for domestic discretionary programs (programs outside of the defense and international areas) will total $373 billion in 2006, representing a cut of $23 billion (5.9 percent) below the level enacted for 2005, adjusted for inflation. Over five years, the cuts in domestic discretionary funding reflected in the new budget total $212 billion. In 2010 alone, the cut would be $59 billion (or 13.5 percent) below the level needed to maintain the 2005 level of funding, after adjustment for inflation.

In Bush's budget, the list of programs to be slashed included Section 8 housing vouchers, home heating assistance, job training programs, Perkins grants for college students, Amtrak operating expenses - pretty much everything other than the military. Already, dire consequences are being predicted for the welfare reauthorization bill, which moderates in the Senate had been hoping would include new child-care funding to offset the burden of the tremendous additional work requirements it would entail; now, with domestic spending capped, it seems extremely likely that single moms in poverty will be told they need to work extra hours in order to receive benefits, but as for their kids, well, maybe they could just go play in traffic.

And as with the Bush budget, the new tax cuts and defense spending would more than gobble up any savings from the spending cuts, meaning that the already soaring federal deficits would go even higher. CBPP has been pointing this out for months now - using the government's own figures, mind you - but it seems to have eluded the nation's ink-stained wretches, who continue to report on the Bush spending cuts as "deficit reduction."

Coverage of the budget bill in the New York Times, for example, cited a Democratic senator as saying, "If you like deficits, you're going to love this budget," but then reported:

As spending and the federal deficit continued to rise, fiscal restraint became a recurring theme in last year's election campaign, and the White House and the Republican leadership have promised to bring spending under control. Now, with Republicans more firmly in control of Congress, their ability to pass a budget has become a test of whether they can make good on that vow.

How passing a budget that would increase deficits by $168 billion is "making good on a vow of fiscal restraint" was left as news unfit to print.

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