Policy Resource

The Path to Austerity Redux

Mar 18, 2012

On Wednesday, the House Budget Committee approved a budget designed by Chairman Paul Ryan, once again adopting a budget plan that would create a path to austerity for many vulnerable children and families.

As with the budget Ryan proposed and the House adopted last year, that path would cut the major health care programs, maintain Social Security, increase defense spending—and drastically shrink federal spending on everything else. That “everything else” includes programs that help provide the basic building blocks for healthy growth and development for babies whose families are struggling to make ends meet.

The most important part of the plan for the immediate future is its rejection of the bargain on discretionary spending struck in last year’s Budget Control Act (BCA). Many in Washington thought that agreement on funding caps would avoid contentious fights over appropriations levels this year. Yet, the Ryan budget proposes to cut an additional $1.2 trillion below the agreed upon levels for domestic programs. On the other side of the ledger, the plan would restructure the tax code with a much lower rate for upper brackets and other changes that the Tax Policy Center estimates would cost $4.6 trillion in revenue over the next 10 years. The plan would pay for some of the tax cuts by closing unspecified tax loopholes.

Some major implications for young children include:

Spending on Health Care for Low-Income Persons Would be Reduced: The budget plan would reduce spending on Medicaid by $810 billion over the next 10 years, converting it to a block grant with a fixed amount of federal spending (compared with the current open-ended match for state programs). Because the budget assumes the repeal of the Affordable Care Act, the Medicaid expansion under health care reform would not occur, and the subsidies for low-income families to purchase insurance through the Health Care Exchanges would not materialize. By 2050, the Congressional Budget Office (CBO) estimates, total spending for low-income health care would be 76% below what it would be under current law. Left holding responsibility for their residents, CBO says, states that do not cover lost federal dollars would have to make choices such as reducing eligibility, covering fewer services, or greater costs to families. The end result of such unpalatable choices would be to reduce access to care for children, families, and other adults. And without health care reform, CBO predicts, the proportion of Americans without health insurance would be much higher.

Food Assistance Would Become a Block Grant: The plan would send the Supplemental Nutrition Assistance Program (SNAP) to the states as a limited block grant under the proposal. Moreover, the plan calls for time limits and work requirements as under the Temporary Assistance for Needy Families (TANF) program. A block grant accompanied by a $122.5 billion cut in program funds would limit SNAP’s ability to respond quickly in times of economic hardship and force states to make wrenching choices about levels of benefits and eligiblity for food assistance. Three-quarters of SNAP recipients are in households with children. Infants and toddlers in food insecure households are at greater risk of damaging effects in the areas of brain and cognitive development in the perinatal period, school readiness, and physical, mental, and social development.

A Disappearing Act for Many Domestic Programs: Under the budget plan, spending on all mandatory programs other than the health programs and Social Security, and all discretionary programs (including defense) would dramatically decline as a proportion of the total economy, from 12 ½ percent of GDP in 2011 to 5 ¾ percent in 2030 and 3 ¾ percent in 2050. What does that mean? CBO notes that spending for these programs has been greater than 8 percent of GDP in every year since World War II. And defense spending by itself has not been below 3 percent during that period. Doing the math, by the year 2050,when today’s babies are trying to build a life for their own families, federal funds for early care and learning programs, K-12 education, roads, food safety, clean water and air, nutrition for babies and “meals on wheels” for seniors, and many, many other services that make our society function better will have largely dried up.

It is important to remember, first, that this proposal is just that, a proposal, and is unlikely to be adopted by the Senate. What the proposal does do is reopen the acrimonious fight over discretionary spending levels that last year’s debt ceiling agreement was supposed to put to rest. This virtually guarantees deadlock on appropriations until after the election.

The second thing to remember is that you can make a difference in the path our policymakers lay out. Last June, through the Baby Policy Blog budget posts as well as videos guiding you through the budget process, we illustrated why understanding the big picture of the budget is important to early childhood advocates and what you should know to become involved. This is a good time to look back at those resources. Then take every opportunity to let your policymakers know that sound budgetary policy is one that helps young children develop a strong foundation, not one that erodes their supports.

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