The Center's work on 'President’s Budget' Issues


Obama Plan to Raise Rents on Rural Poor is the Wrong Way to Save Money

April 11, 2014 at 12:30 pm

About 42,000 extremely poor families — 15 percent of those assisted through the Agriculture Department’s (USDA) rural rental assistance program — could face rent increases of up to $600 a year under a proposal in President Obama’s 2015 budget.

Today, families with rural rental assistance must pay 30 percent of their income for rent and utilities.  The President’s proposal would require property owners to charge families a minimum of $50 a month — even if this exceeds 30 percent of their income.  Many of those who would be affected are especially vulnerable to hardship:  64 percent of households with USDA rental assistance have a head (or the head’s spouse) who is elderly or has a disability, and 135,000 children live in low-income families receiving such assistance.

USDA budget documents say that one goal of the proposal is to “encourage financial responsibility in tenants, increasing their opportunity for success on the path to homeownership.”  But there is no evidence that requiring destitute families to pay $50 a month helps them get back on their feet.  To the contrary, a growing body of research shows that extreme poverty — which the USDA proposal would exacerbate — does long-term damage to children’s neural development and education and employment prospects.

A second goal is to save money.  USDA estimates that the policy will reduce program costs by $5 million in 2015 and $20 million annually in later years.  But policymakers could surely find better ways to save $20 million a year than raising rents on some of the most vulnerable people in rural America.

USDA points out that some households with rental assistance through the Department of Housing and Urban Development (HUD) must pay $50 minimum rents.  But no major HUD program imposes a program-wide $50 minimum rent like USDA has proposed.  HUD’s supportive housing programs for the elderly and people with disabilities do not charge a minimum, while the Section 8 Project-Based Rental Assistance program has a $25 minimum rent and state and local agencies administering Housing Choice Vouchers and Public Housing can set the minimum below $50 or have no minimum at all.

USDA has also claimed that a proposed exemption for families who would face hardship from minimum rents — modeled on similar exemptions in HUD programs — would minimize any adverse consequences.  Tony Hernandez, the Administrator of USDA’s Rural Housing Service, told a House Appropriations subcommittee that households with incomes of $2,000 a year “probably would not have to pay because they would be exempted because of the hardship clause.”

But experience in the HUD programs indicates that very few would likely be exempted.  As we’ve noted, the HUD hardship policies have had little impact, partly because they require tenants — many of whom have physical or mental disabilities or very low education levels — to seek out exemptions.  A 2010 HUD study found that 82 percent of state and local housing agencies that chose to impose minimum rents exempted less than 1 percent of affected households.  (Moreover, the minimum rent proposed by USDA would fall almost exclusively on families with incomes close to or below $2,000, so if most of those families were exempted, the policy’s savings would largely disappear.)

Families facing hardship might have an even harder time obtaining exemptions in the USDA rental assistance program, where small rural property owners with limited administrative capacity would be responsible for implementing the hardship policy.  The best way to protect these families would be to reject the President’s proposal.

Obama, Ryan Miles Apart on Non-Defense Discretionary Funding

April 8, 2014 at 3:35 pm

One especially stark difference between the recent budgets from President Obama and House Budget Committee Chairman Paul Ryan is in non-defense discretionary (NDD) funding, the budget category that includes key investments in the economy, such as education and basic research; support for low-income families, such as Head Start and housing assistance; and essential services that Americans expect, such as veterans’ medical care and food safety inspections.  Obama and Ryan are roughly $1 trillion apart on total NDD funding over the next decade.

First, some background.  Since the fall of 2010, when policymakers initiated deficit-reduction efforts, they have cut funding for NDD programs in three waves:  first, in the appropriations bills for fiscal year 2011, then again in 2012 through the Budget Control Act’s (BCA) funding caps (which extend through 2021), and then again when sequestration (which automatically lowers the BCA caps on defense and non-defense funding) took effect in 2013.

Last December, the Murray-Ryan budget agreement, which was enacted in the Bipartisan Budget Act, alleviated some of sequestration’s effects in 2014 and 2015.  Even so, NDD funding in 2014 under the agreement is roughly 15 percent below the 2010 level, adjusted for inflation, and will be about 17 percent below the 2010 level in 2015.

The President’s budget mitigates sequestration’s effects on NDD programs, adding about $200 billion over 2015-2024 above sequestration’s low levels.  The Ryan budget, by contrast, goes well beyond sequestration, cutting funding for NDD programs nearly $800 billion below the sequestration levels.  That’s a $1 trillion difference over the decade.

Congress has shown little appetite for re-opening the Murray-Ryan agreement for 2015.  The President’s call for more funding that year — offset by entitlement cuts and revenue increases — has gained little traction.  But a key issue is what happens starting in 2016.


As the chart shows, even with the President’s proposed level for 2016 — which would eliminate all of that year’s sequestration cuts for NDD programs — NDD funding would remain 12 percent below its inflation-adjusted 2010 level.  And over the decade, the President’s proposal wouldn’t erase all of the effects of sequestration.

Moreover, under the President’s proposal, NDD funding will still fall by 2017 to its lowest level on record as a share of gross domestic product (GDP) based on data available back to 1962.  That’s true because the BCA’s NDD caps are so tight, even without sequestration.

But the Ryan budget’s NDD cuts go much further.  Their depth is staggering — 25 percent below the inflation-adjusted 2010 level in 2016, and 36 percent below that level in 2024.  (The Ryan budget is 15 percent lower than the sequestration level in 2016, with the cut growing to 22 percent by 2024.)

Policymakers will have to confront the future of NDD programs next year when the Murray-Ryan deal’s modest relief from sequestration ends.   Chairman Ryan’s extremely harsh vision would represent a very large step backward.  Even the President’s proposal, while moving in the right direction, likely won’t be sufficient to meet the nation’s needs over the coming decade.

Ryan Roundup 2014: Everything You Need to Know About Chairman Ryan’s Latest Budget

April 8, 2014 at 9:52 am

We’ve compiled CBPP’s analyses and blog posts on House Budget Committee Chairman Paul Ryan’s budget.  We’ll update this roundup as we issue additional analyses.

  • Analysis: Ryan Block Grant Proposal Would Cut Medicaid by More Than One-Quarter by 2024 and More After That
    April 4, 2014
    “The Medicaid block grant proposal in the budget plan proposed by House Budget Committee Chairman Paul Ryan on April 1 would cut federal Medicaid (and the Children’s Health Insurance Program, or CHIP) funding by 26 percent by 2024, because the funding would no longer keep pace with health care costs or with expected Medicaid enrollment growth as the population ages….  These cuts would come on top of repealing the health reform law’s Medicaid expansion.”

    Blog Post: Ryan Budget Again Proposes a Medicaid Block Grant, Adding Millions to the Ranks of the Uninsured and Underinsured

  • Blog Post: Ryan Budget Mischaracterizes Housing Vouchers, Then Sets the Stage to Cut Them
    April 4, 2014
    “House Budget Committee Chairman Paul Ryan used a faulty number to argue that ‘Section 8’ Housing Choice Voucher program costs have risen excessively.  His budget documents also float a proposed expansion of the Moving to Work (MTW) demonstration that could lay the groundwork for deep, harmful cuts in the voucher program in years to come.  That program, which helps 2.1 million low-income families rent modest units of their choice in the private market, is just beginning to recover from the loss of 70,000 vouchers due to sequestration budget cuts last year.”

  • Analysis: Ryan Budget Would Slash SNAP by $137 Billion Over Ten Years: Low-Income Households in All States Would Feel Sharp Effects
    April 4, 2014
    “House Budget Committee Chairman Paul Ryan’s budget plan includes cuts in the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program) of $137 billion — 18 percent — over the next ten years (2015-2024),  which would necessitate ending food assistance for millions of low-income families, cutting benefits for millions of such households, or some combination of the two.  Chairman Ryan proposed similarly deep SNAP cuts in each of his last three budgets.”

    Blog Post: Ryan’s SNAP Cuts Would Hit Millions of Low-Income Americans

  • Analysis: Medicare in Ryan’s 2015 Budget
    April 8, 2014
    “The Medicare proposals in the 2015 budget resolution from House Budget Committee Chairman Paul Ryan (R-WI) are much the same as those in Ryan’s previous budgets. Once again, Chairman Ryan proposes to replace Medicare’s guarantee of health coverage with a premium-support voucher and raise the age of eligibility for Medicare from 65 to 67. Together, these changes would shift costs to Medicare beneficiaries and (with the simultaneous repeal of health reform) leave many 65- and 66-year-olds without health coverage.”Blog Post: Ryan’s Medicare Proposals: the Latest
  • Analysis: Ryan Plan Gets 69 Percent of Its Budget Cuts From Programs for People With Low or Moderate Incomes
    April 8, 2014
    “House Budget Committee Chairman Paul Ryan’s new budget cuts $3.3 trillion over ten years (2015-2024) from programs that serve people of limited means. That’s 69 percent of its $4.8 trillion in total non-defense budget cuts. Not much has changed on this front from Chairman Ryan’s budget plan of a year ago, or the year before that. Then, too, Chairman Ryan proposed very deep cuts, the bulk of which were in programs that serve low- and moderate-income Americans.The deficit reduction plan that Fiscal Commission co-chairs Erskine Bowles and Alan Simpson issued in late 2010 established as a basic principle that deficit reduction should not increase poverty or widen inequality. The Ryan plan charts a radically different course, imposing its most severe cuts on people on the lower rungs of the income ladder.”

    Blog Post: Ryan Budget Gets 69 Percent of Its Cuts From Low-Income Programs [Updated]

  • Blog Post: Obama, Ryan Miles Apart on Non-Defense Discretionary Funding
    April 8, 2014
    “One especially stark difference between the recent budgets from President Obama and House Budget Committee Chairman Paul Ryan is in non-defense discretionary (NDD) funding, the budget category that includes key investments in the economy, such as education and basic research; support for low-income families, such as Head Start and housing assistance; and essential services that Americans expect, such as veterans’ medical care and food safety inspections.  Obama and Ryan are roughly $1 trillion apart on total NDD funding over the next decade.”
  • Blog Post: Ryan Budget a Path to Adversity for Millions — and Maybe for the Economy Too
    April 9, 2014
    In his latest US News & World Report post, CBPP Chief Economist Chad Stone reprises analysis showing that House Budget Committee Chairman Paul Ryan’s “Path to Prosperity” budget is, in fact, as CBPP President Robert Greenstein described it, a path to adversity for tens of millions of Americans.  He then discusses why it also could be a path to adversity for the economy as a whole.
  • Blog Post: Chairman Ryan’s Response to the Center’s Analysis Doesn’t Hold Water
    April 10, 2014
    “House Budget Committee Chairman Paul Ryan took exception to our finding that 69 percent of the non-defense spending cuts in his new budget come from programs for people with low and moderate incomes.  But he makes no attempt to refute our calculations, and his response both defies logic and conflicts with his own budget and even his own words.”
  • Blog Post: Chairman Ryan’s Obfuscation: Part 2
    April 10, 2014
    “In his attempt to deflect our finding that 69 percent of his budget cuts come from programs targeted on Americans of limited means, Ryan says that Medicaid would receive over $3 trillion during the coming decade under his budget and that its costs would grow in all years after 2016.  [This blog post explains] what his too-clever-by-half response conceals.”
  • Statement: Robert Greenstein, President, On the House Passage of Chairman Ryan’s Budget Plan
    April 11, 2014
    “House Budget Committee Chairman Paul Ryan’s “Path to Prosperity” budget, which the House has now passed, is anything but that for most families and individuals.  Affluent Americans would do quite well, but for tens of millions of others, the Ryan plan — which gets 69 percent of its cuts from programs that serve people of limited means — is a path to more adversity.”

Greenstein: We Need a Stronger EITC and Minimum Wage

March 5, 2014 at 12:19 pm

On last night’s PBS “NewsHour,” CBPP President Robert Greenstein discussed the President’s new budget and issues that both sides of the aisle might agree on.  In this exchange with host Judy Woodruff and James Capretta from the Ethics and Public Policy Center, Greenstein explained why we should strengthen both the Earned Income Tax Credit (which the President proposes expanding for childless workers) and the minimum wage:

JUDY WOODRUFF: [W]hat do you see in here, Jim Capretta, where you see the two parties could work together?

JAMES CAPRETTA: Well, there’s one possibility. I don’t know how much of a chance, but around the Earned Income Tax Credit, there’s more bipartisan support for that kind of an approach to wage supplements than it is for just redistributing through taxing and spending.

[The] Earned Income Tax Credit is a program that Bob knows well that provides additional support directly through the federal tax system to people that are actually working, have a job, and it boosts their income directly to the proportion of earned wages. It’s the kind of thing that could be built on.

It’s better than doing, frankly, a minimum wage increase, certainly of the size the president has pushed….

ROBERT GREENSTEIN: I think we need to do both the minimum wage increase and the Earned Income Credit.

You can’t do the whole thing through the Earned Income Credit. It puts too much strain on government finances. You can’t do the whole thing through the minimum wage. That puts too much strain on employers.

But I think Jim is right that there is a potential here, for even another reason. The president is proposing to increase the Earned Income Credit for workers not living with minor children. We already have a sizable Earned Income Credit for families with kids.

When you look at these young workers or middle-aged workers who are single individuals, if they’re paid low wages, they’re the one group whom the federal government today literally taxes into poverty or deeper into poverty. That should be something that both parties can say, that’s not a good idea. And both parties want to encourage these people to work more, and the Earned Income Credit does that.

We’ve documented the importance of extending the EITC to childless workers and why we need a stronger minimum wage.

Watch the interview below:

Greenstein on President Obama’s New Budget

March 4, 2014 at 1:47 pm

CBPP President Robert Greenstein has issued a statement on the President’s fiscal year 2015 budget:

President Obama’s new budget is a solid blueprint that would reduce deficits, alleviate poverty, and boost investment in areas needed for future economic growth, such as infrastructure, education, and research.

On the deficit front, the budget confounds the recent predictions of some pundits by including, rather than eschewing, deficit reduction.  While offsetting the costs of its new investment initiatives by cutting spending and scaling back tax breaks, the budget goes further by reducing deficits enough to put federal debt as a share of gross domestic product (GDP) on a declining path.  With about $1.7 trillion in deficit reduction over the next ten years (excluding the savings from winding down operations in Afghanistan), the budget would reduce the debt-to-GDP ratio to 69 percent in 2024.

As previously announced, the budget doesn’t include the proposal in the President’s budget last year to switch to the “chained Consumer Price Index” in calculating annual cost-of-living adjustments in Social Security and other programs.  It does, however, retain the $400 billion in Medicare savings in last year’s budget, including about $60 billion in Medicare beneficiary reductions (through increases in premiums for affluent beneficiaries, increases in some co-payments, and changes affecting Medigap coverage).

On the poverty-fighting front, the budget features an important proposal to boost the Earned Income Tax Credit (EITC) for low-income workers who are not living with minor children — a measure many analysts across the political spectrum believe holds considerable promise for reducing poverty and also increasing labor-force participation, including among young minority men.  Single low-wage men and women are the one group of Americans whom the federal tax code literally taxes into — or deeper into — poverty.  The Obama proposal, which builds on a long bipartisan tradition of support for the EITC, would substantially address that problem.

No one should declare this budget “dead on arrival,” for two reasons.  First, under the Murray-Ryan agreement of last year, both parties have agreed on the total amount available for appropriated programs this year, and the Obama budget includes program-by-program requests that hit that total.  Consequently, the budget’s appropriations requests will likely play an important role as the Appropriations Committees craft the annual funding bills this year.

Second, with no big budget showdowns or deadlines looming this year, 2014 likely won’t be a year of significant budgetary action beyond the appropriations bills.  But 2015 may well be.  Policymakers likely will seek to negotiate another budget deal to ease the scheduled sequestration budget cuts for 2016 and beyond and also may consider tax reform and other measures.  Both the new Obama budget and the budget proposal that House Budget Committee Chair Paul Ryan will unveil in a few weeks will offer dueling frameworks for a year-long debate on where fiscal and program policy should go, in advance of larger decisions next year.

The vision reflected in the Obama budget will provide a much sounder course than the one we’ll likely see in the Ryan budget.  That’s because the Obama budget curbs lower-priority spending and unproductive special-interest tax breaks in order to make investments that the nation needs for future prosperity, reduce poverty and better reward low-paid work, and give many young children a better chance of success, while reducing mid-term and long-term deficits at the same time.