Children’s Alliance hits misplaced priorities in U.S. House budget

CBPP report: Services for vulnerable NH kids, families would lose as much as $115 million in federal funding

March 30, 2005

The day after parents and caregivers in Concord described the potential "devastating" impact of the NH House Finance Committee's budget, a research organization is reporting that the state could lose millions more in federal funding for human services over the next five years.

Analysts at the Washington D.C.-based Center on Budget and Policy Priorities say that if Congress approves the budget plan the U.S. House passed earlier this month, New Hampshire stands to lose as much as $115 million in funding for programs that assist low-income elderly residents, families with children, and people with disabilities.

If these cuts are made, a substantial number of vulnerable New Hampshire residents could lose necessities like health care, child care, or food assistance — at the same time that affluent households across the nation receive large tax breaks.

"If the House has its way, our most vulnerable children will go without health care. Working parents will struggle to put food on the table. But we'll continue to pile tax cuts on the plates of the nation’s most privileged individuals," said Steve Varnum, public policy director at the Children's Alliance of New Hampshire. "Are these America's priorities? This policy is neither balanced, reasonable or responsible, and we hope it will be opposed by New Hampshire's delegation."

Nationwide, the House budget plan could result in an estimated $30 to $35 billion in cuts in key low-income "mandatory" (also known as "entitlement") programs that assist vulnerable Americans, such as the elderly and children. These cuts are at least 10 times larger than the cuts in these programs in the Senate budget plan.

Because the House and Senate budgets are so far apart, cuts in low-income mandatory programs will be a key issue when Congressional negotiators try to agree on a final budget plan in April.

The House and Senate are much closer on the issue of tax cuts: both include more than $100 billion in tax cuts. Both plans also contain significant reductions in funding for domestic non-entitlement (also known as "discretionary") programs and significant increases in defense spending.

Medicaid, Food Stamps, EITC, other programs face reductions

The cuts in low-income programs in the House budget plan would come from Medicaid, food stamps, and a set of programs overseen by the House Ways and Means Committee. Those include the Earned Income Tax Credit (EITC) (a tax credit for low-income working families), the Supplemental Security Income program (SSI) for the elderly and disabled poor, assistance and services for abused and neglected children and foster and adoptive families, Temporary Assistance for Needy Families (TANF), and child care.

The Center on Budget and Policy Priorities estimates that as a result of these cuts, New Hampshire residents could lose::

• Between $55 and $74 million in Medicaid funding. Roughly 54,000 children rely on Medicaid for their basic health care. Nearly half of those children are in the 6-14 age group.
• Up to $10 million in EITC benefits. Roughly 58,000 working families in New Hampshire receive the EITC, which provides low-wage workers with tax relief and wage supplements
• Up to $7.9 million in SSI benefits. Roughly 13,000 poor elderly and people with disabilities in New Hampshire receive modest monthly SSI payments to help them cover their basic expenses.
• Up to $9 million in food stamps. An average 48,000 New Hampshire individuals each month receive food stamp assistance that helps them afford a modest, nutritionally adequate diet.
• Up to $5.5 million in TANF funding and child care funding, which provide income assistance and welfare-to-work programs for roughly 14,400 parents each month.
• Up to $2.5 million in foster care and adoption assistance. Each month, these programs provide assistance to 1,100 New Hampshire children in foster and adoptive families and fund efforts to find appropriate foster care placements for children and to prepare older children living in foster care for independent living.

Program cuts would pay for new tax cuts, not reduce the deficit

"What makes these budget cuts even more disturbing is the fact that they're being proposed to help pay for more tax breaks for wealthy households," said Varnum.

Both the House and Senate budget plans would drive the federal deficit more than $100 billion higher over the next five years than it would be if no policy changes were made.
For example, the House budget plan would use $23 billion to extend existing tax cuts related to capital gains and dividends for two more years, through 2010. (These tax cuts currently are slated to expire at the end of 2008.) That cost is equal to about two-thirds of all cuts in low-income mandatory programs in the House budget plan.

Nearly half of the benefit of extending the capital gains and dividend tax cuts will go to households with annual incomes of more than $1 million. These very high-income households would receive an average annual tax cut of $10,000 apiece, on top of the $90,000 a year they already receive from other tax cuts enacted since 2001.

Viewed another way, the House budget slashes up to $5 billion from food stamps for vulnerable families while providing more than $10 billion in tax cuts for millionaires under its capital gains and dividend provisions alone.

Congress could have offset the capital gains and dividend extensions by closing unproductive tax breaks and reducing tax avoidance. In January, the Congressional Joint Committee on Taxation issued a report that contained ways to achieve about $190 billion in tax savings over the next five years through such types of measures.

"People who care about kids and families need to stop the House’s cuts in vital services and supports for the nation’s poorest and most vulnerable families now, before they become part of the final budget resolution," said Varnum. "We hope Senators Gregg and Sununu will hold firm and say that these program cuts reflect the wrong priorities."

"This country stands for something better than taking food and health care from vulnerable children so we can shower tax cuts on those who least need them."

The Children’s Alliance of NH, based in Concord, is an independent, research-based organization that advocates for the well-being of all children.

The Center on Budget and Policy Priorities analysis, “House Budget Resolution Would Require Much Deeper Cuts In Key Low-Income Programs Than Senate Budget Plan,” includes state-by-state information.

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