Federal budget delay presents opportunity for children's advocates to stop harmful cuts

Congress has the wrong priorities! Children's Alliance urges advocates to participate in national Congress call-in days Oct. 17-18

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October 5, 2005

Earlier this year, Congress passed a budget blueprint (called a “budget resolution") that required some congressional committees to develop legislation by Sept. 16 that would cut various entitlement programs, including Medicaid and Food Stamps. The bills the committees developed would be merged into a single bill called a “reconciliation” (pdf link) bill. This tactic was used by the budget-cutters because under Senate rules, reconciliation bills are difficult to amend and cannot be filibustered.

The budget resolution also called for a second “reconciliation” tax bill that would allow Congress to create an additional $70 billion in new tax cuts without offsetting the cost. Taken together, the two reconciliation bills would increase the deficit because the tax cuts they contain are larger than the spending cuts.

In response to Hurricane Katrina, House and Senate Republican leaders in mid-September delayed the votes on both the budget-cutting reconciliation bill and the tax-cutting reconciliation bill. It is now expected that sometime during the week of Oct. 17, House and Senate committees will report out their budget-cutting reconciliation bills. The House and Senate will each merge those committee bills into a single bill by Oct. 26. The House and Senate will then consider their chamber’s version of the budget-cutting reconciliation bill sometime soon after Oct. 26.

The tax–cutting reconciliation bill is expected to be considered in November. (Other tax measures that supporters claim are in response to Hurricane Katrina may be considered earlier.)

Differing views on budget cutting

It is likely that the House and Senate Republican leaders decided to delay the budget reconciliation process for a number of reasons. These include a concern after the hurricane exposed the problems of poverty and inequality in the United States that cutting key programs for vulnerable Americans, such as food stamps and Medicaid, would be highly unpopular. Congress also needed time to respond to the hurricane.

Since the delay was announced, Republicans in Congress have disagreed about how to proceed. Some conservatives have argued that deeper cuts both in entitlement programs and in other domestic programs (called domestic discretionary programs – those programs funded through the annual appropriations process) should be made to pay for hurricane relief and rebuilding efforts.

Other lawmakers – Republicans and Democrats – have called for abandoning budget cuts in low-income programs (and the entire budget-cutting reconciliation bill), arguing that in light of what the hurricane showed us about poverty in America, we should not be cutting programs for vulnerable families.

We are encouraged that some members of Congress are reconsidering the budget reconciliation bill for entitlement cuts. For example, Senate Agriculture Committee Chairman Saxby Chambliss of Georgia was quoted in Congressional Quarterly as stating, “Is it fair to look at the food stamp section and try to achieve significant savings when we have this disaster and there is the potential for a request for additional money for food stamps?" Also, a Palm Beach Post article stated, “(Senator) Frist, a heart and lung transplant surgeon who is considered a possible Republican presidential candidate for 2008, said the purpose of the proposed cuts was to slow annual growth in the federal-state health-care program for the poor from about 7.4 percent to 7.1 percent by reducing waste, fraud and abuse. But spending cuts that result in ’cutting back on care ... would be absolutely wrong,’ he said.” This could be helpful in arguing against Medicaid cuts.

The bad news is that some conservative House Republicans have called for federal spending on Hurricane Katrina relief efforts to be offset by cuts elsewhere in the federal budget, including key low-income programs. Their “Operation Offset” would include deep cuts in the Medicaid program and Earned Income Tax Credit. While it is unlikely that many of their specific ideas would be enacted, the effort represents a vocal portion of the House Republican Caucus that is committed to seeing that the reconciliation process proceeds. Moreover, this group could push for deeper cuts in the budget-cutting reconciliation bill and in appropriations bills. In fact, some members of this group have said that the savings targets established in the budget cutting reconciliation bill should be viewed as the minimum levels of cuts that need to be achieved.

NH Sen. Judd Gregg, the powerful Chair of the Senate Budget Committee, has also requested larger spending cuts than those required by the reconciliation instructions.

It is unclear which direction House and Senate leadership will decide to take. They could decide to continue down the same path of spending and tax cuts, stop budget reconciliation altogether, or pursue even deeper cuts in the budget reconciliation bill and through the appropriations bills. Congressional leaders are expected to decide whether to continue down the reconciliation path during the Columbus Day break or immediately thereafter.

Our window of opportunity: Call for “No Budget Reconciliation Process”

The delay in the budget reconciliation process presents us with a window of opportunity to publicly push for cancellation of the budget reconciliation process altogether – meaning the cancellation of both the required entitlement cuts and the $70 billion in additional tax breaks. It is worth reminding policymakers and the press that taken together, these two bills increase the deficit. That is, if neither reconciliation bill passes, the deficit will be lower than if budget and tax reconciliation bills that adhere to the targets in the budget blueprint are enacted. And, it is worth noting that the cuts to Medicaid and food stamps are not going toward deficit reduction but toward partially paying for the tax cuts.

Key messages for Congress

1. Congress should not return to "business as usual."
The "budget reconciliation" process of entitlement and tax cuts has postponed until mid-October, but it should be canceled entirely. The last thing we should be doing after the Katrina experience is plunging other families deeper into poverty by cutting Medicaid and food stamps. Nor should Congress pursue new tax cuts for wealthy investors, which would worsen the deficit and provide a costly helping hand to those who need it least.

2. Domestic programs should not be singled out for cuts to pay for Katrina relief.
It makes no sense to heap the burden of "paying" for Katrina relief on key domestic programs through reconciliation or cuts in the appropriations process. The one-time costs of Katrina relief are affordable in the short run, but our nation does face severe long-term fiscal challenges, and those should be approached in a spirit of shared sacrifice. That means Congress should reexamine the tax side of the budget as well. Millionaires, who already receive $100,000 per year from the Bush tax cuts, are slated for another $20,000 tax break starting on January 1st. Surely as a first step towards restoring fiscal discipline we can cancel this tax break, rather than asking for sacrifice from vulnerable populations and parts of the budget that have already been squeezed.

3. Congress has the opportunity to set new priorities and make the right choices this fall.
Budgets are all about priorities and choices. In the wake of the recent hurricanes, Congress should reassess its plans and set a new course -- one that places a priority on meeting the needs of vulnerable families, including those directly impacted by the hurricanes, rather than cutting vital programs or dispensing unnecessary tax breaks to the wealthy that will just pile more debt on future generations. Congress can and should choose to do the right thing this fall.

-- Material from Center for Budget and Policy Priorities