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Insufficient Funding for Low Income Programs

Friday, March 11, 2005

Committee Budget Resolutions Allow Insufficient Funding for Low Income Programs

Both the House and Senate Budget Committees took detrimental actions on low income programs in their respective FY06 budget proposals the week of March 7. Both chambers of Congress have proposed budget resolutions that pave the way for severe cuts to low income programs and the provision of additional tax cuts to the wealthy.

Budget Process

The budget resolutions passed by the House and Senate Budget Committees on March 9 and 10, respectively, set spending levels for the various "budget functions." Budget functions are the spending categories in which federal programs fall. For example, budget function 600 is the Income Security function, which includes the majority of housing programs. Budget function 450 is the Community and Regional Development function, which includes the Community Development Block Grant (CDBG) program.

After the funding levels for each function are set, the money is distributed to the appropriations committee in each chamber. The allocation to the full appropriations committee is called a 302(a) allocation. Upon receiving the 302(a) allocation, the respective Chairs of the appropriations committees then divide the 302(a) allocation among the appropriations subcommittees. The subcommittee allocations are referred to as the 302(b)

The House

The House budget resolution matches the President's proposed discretionary funding levels over the next five years, including $843 billion funding level for discretionary programs in FY06. At this funding level, discretionary domestic programs would be cut by $216 billion over the next five years.

Budget function 600, which covers HUD housing programs, is cut by the House Budget Committee. Discretionary spending between FY06 and FY10 declines from $47.1 billion in FY06 to $45.5 billion in FY10. These cuts would include cuts to housing programs, such as Section 8, public housing and most other HUD housing programs. The discretionary total for Function 600 is $141 million below the President's budget for FY06. Likely, all of the cuts to housing programs (and others, like the low income home energy assistance program) in the President's FY06 budget request are assumed in the House committee's resolution as well.

Discretionary spending for budget function 450, which covers community and regional development programs, including CDBG, the Community Development Financial Institutions Fund and the Rural Community Advancement Program, declines from $22.7 billion in FY05 to $14.4 billion in FY10 in the House committee resolution.

The House budget resolution exceeds the President's mandatory spending cut request by nearly $18 billion. The House budget resolution proposes cutting mandatory spending by $68.6 billion over the next five years. The most likely mandatory programs that will be affected by these cuts are programs for the poor, such as food stamps and Medicaid. The $68.6 billion in cuts have been enforced in reconciliation instructions. Committees affected by these instructions include, Education and Workforce, Agriculture, and Ways and Means. Programs under these committees' jurisdiction that are likely to be targeted for cuts, include food stamps, the earned income tax credit, and the Supplemental Security Income (SSI).

While the budget committee offered reconciliation language to committees to save money, there were also reconciliation instructions to protect $45 billion in tax cuts. The House bill proposes $106 billion in tax cuts over the next five years, but $45 billion would be under reconciliation.

The Senate

The Senate budget resolution also meets the President's proposed levels for discretionary spending over the next five years, including $843 billion in FY2006; thereby causing the same cuts to the discretionary programs, including housing, as in the House budget proposal. According to the Center on Budget and Policy Priorities, in 2010 alone $57 billion would be cut from discretionary programs.

Unlike the House, the Senate proposal includes 3-year budget caps on discretionary spending (FY06, FY07 and FY08). The caps, however, would not prevent appropriators from increasing funding levels because included in the budget resolution is a "reserve" for appropriators to use if they deem necessary to exceed the caps. Sixty votes would be needed to raise domestic discretionary spending above the cap level.

"For the nest two years, the Chairman's mark would set discretionary spending limits on budget authority reflecting the President's Request for national defense and homeland security and modest inflation adjustment for the balance of discretionary spending," according to the Senate Budget Chairman's Summary. Discretionary spending for budget function 450 declines from $23 billion in FY05 to $13.4 billion in FY10 in the Senate committee's resolution.

Duplicating House efforts, the Senate budget resolution also includes reconciliation instructions to cut mandatory spending programs, which would include programs such as Medicaid. The instructions are for respective committees to find a net savings of $32 billion, which is less than the House and Administration's budget proposals. Nonetheless, such drastic spending cuts would adversely affect low income people disproportionately.

While it did not include caps on mandatory spending, as proposed by the President, the Senate budget resolution includes a new proposal that would prohibit any legislation that would cause an increase in mandatory spending of $5 billion or more over a ten year period from 2015 to 2055 to have 60 votes to pass. For example, if the Senate wanted to pass a bill today that would increase funding for Medicaid by $5 billion from 2015 to 2020, the bill would require 60 votes to pass. Tax cuts, however, do not have to meet the same requirement.

The Senate also included reconciliation language for tax cuts that would allow $70 billion in tax cuts to be protected from filibuster. The Senate budget resolution maintains the one - sided pay-as-you-go language, which requires increases in mandatory spending to be offset by cuts in other programs, but does not require similar offsets for tax cut increases. On the Senate floor, however, Senator Russ Feingold (D-WI) plans to offer an amendment that would enact pay-as-you-go legislation to require offsets for both mandatory spending increases as well as tax cuts.

What is reconciliation?

Reconciliation is a procedure, in which the Budget Committee "instructs" committees with authority over mandatory spending programs, such as Agriculture or Ways and Means, to produce legislation that would enact spending cuts or raise revenue. In the past, the process has been used, as intended, to balance the budget by mandating spending cuts as well as tax increases. However, in recent years, the process has been used to only enforce spending cuts on mandatory programs. Without reconciliation legislation a budget resolution is not enforceable, thus it becomes a "guideline" for committees to use when determining funding allocations.

Committees "instructed" to introduce reconciliation language determine which programs to cut to meet the spending request. The normal legislative process allows for an extended floor debate to prevent a vote - known as filibuster. It usually takes 60 votes to stop a filibuster and pass legislation. If reconciliation language reaches the floor of the Senate, it will only take 51 votes to stop a filibuster and pass reconciliation legislation.

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