Policy Resource

Budget and Appropriations Update

Apr 18, 2012

While several committees have been acting on these instructions, three are particularly important to programs serving young children and their families.

Congress will not be producing a budget blueprint this year, as the two houses will not come to an agreement on funding levels. The Senate has announced that it will abide by the spending limits in last summer’s debt ceiling bill (Budget Control Act or BCA) and call it a day. Meanwhile, the House has taken a step further, not only adopting a budget that calls for more spending cuts than the BCA, but also going through its own reconciliation process to achieve those lower spending targets. While the prospects for a reconciliation bill in the Senate are unclear, the House proposals give an alarming picture of where priorities lie on that side of the Hill. The bottom line is that vulnerable children and families will lose out to tax cuts and shoulder the burden of deficit reduction.

A refresher on reconciliation: When both Houses of Congress agree on a budget that includes new spending targets for programs with mandatory funding, they include “reconciliation instructions” to Committees to pass legislation that will adjust mandated spending to those new targets. Because there will be no real joint budget resolution this year, there will be no real reconciliation process. The House process shows what they would do to alter priorities in the federal budget. The plan is presumably to package the handiwork of the various committees into one big bill and pass it through the House, after which it could stall in the Senate.

While several committees have been acting on these instructions, three are particularly important to programs serving young children and their families.

Agriculture Committee Cuts the Supplemental Nutrition Assistance Program (SNAP):

This Committee was first to act and had to meet the House-approved budget requirement to produce $33 billion in savings over the next decade. On April 18th, the Committee approved a proposal that would take the entire amount from cuts to SNAP, formerly known as food stamps. The cuts would reduce or eliminate benefits for all SNAP households, including the poorest. According to the Center on Budget and Policy Priorities (CBPP), some 2 million individuals would lose SNAP entirely. The remaining 44 million individuals who receive SNAP would see their benefits cut. The proposal would increase poverty and hardship and could affect the economy adversely. CBPP shows that in 2010, SNAP lifted about 4 million people out of poverty, including about 2 million children. The proposed cut in SNAP benefits would push some households into poverty and deepen the extent of poverty for millions of others.

Committee on Ways and Means Cuts Social Services:

The House budget instructed this Committee, which oversees major social services programs, to find $53 billion in savings. The committee eliminated the Social Services Block Grant, which helps over 11 million kids through funding to states for services such as child abuse prevention and intervention, foster care, child protective services and child care.Its bill, approved on April 18, also would deny access to the child tax credit to parents who pay federal income taxes using an Individual Taxpayer Identification Number instead of a Social Security number. This provision is aimed mainly at American-born children whose parents are low-income working immigrants. The Center for American Progress shows that this change would take $1,800 away from the families of 5.5 million children in working families with incomes below the poverty level.

Energy and Commerce seeks to roll back health care reform:

The Energy and Commerce Committee was instructed to find $3.8 billion in savings this year, and $96.8 billion over 10 years. This action doesn’t include the budget’s proposal to actually block grant Medicaid. To achieve this goal, they have targeted the health care overhaul. Their measure, approved on April 25, would eliminate the Prevention and Public Health Fund, the nation’s first mandatory funding stream dedicated to enhancing community-based preventive health programs. For example, one 2010 initiative related to children included nutrition, physical activity, and screen time standards in child care settings, and broader obesity prevention in early childhood programs.

The measure would repeal the maintenance of effort (MOE) requirements on states for Medicaid and the Children’s Health Insurance Program, allowing states to apply more restrictive eligibility standards for programs (thus allowing states to drop hundreds of thousands of children from Medicaid and CHIP). It also would reduce the federal Medicaid match, shifting more program costs to the states.

Appropriations Levels Differ in House and Senate:

The final piece of the budgetary puzzle is discretionary spending, which must be approved by the Appropriations Committees every year. The BCA agreement, reached after much debate and brinksmanship over sending the country into credit default, set limits for multiple years, reducing discretionary spending by $900 billion over 10 years. The Senate is using the 2013 overall limit for its Appropriations bills, but the House budget reduced that limit by an additional $19 billion, thereby pretty much assuring there will be no resolution of final funding levels until after the November election. Adding to concerns is the fact the House bill that funds the Departments of Health and Human Services and Education would receive one of the largest cuts, coming in at $7.7 billion less than in the Senate. Most of the programs that help support infants and toddlers are in this bill.

One rationale for all these cuts is to forestall the across-the-board cut, or sequester, built into the BCA if Congress failed to come up with additional savings. Those cuts were split between defense and domestic spending. The cuts laid out by the House Committees would help shift the burden of the cuts away from defense and more heavily on domestic programs. At this point, the Senate isn’t likely to go along with the cuts or the shift, setting up another big issue until after the election. Yet, just having these proposals moving through one House of Congress is an alarming development.

But the House budget doesn’t direct all of its savings toward deficit reduction. It also envisions major new tax cuts as well as the extension of all of the Bush-era tax rates which expire at the end of 2012. These tax issues complete the triad of unresolved budget questions that will be on the table for a lame duck session of Congress. To paraphrase Bette Davis, strap your babies tightly into their car seats, it’s going to be a bumpy ride.

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