Off the Charts Blog | Center on Budget and Policy Priorities

To complement our statement on the President’s fiscal year 2014 budget, we’ve issued a report on its key elements.  Here’s the opening:

The President’s 2014 budget is presented in two parts.  One part includes the package of deficit- reduction policies that the President included in his last offer to Speaker Boehner during the “fiscal cliff” negotiations in December 2012.  This package would reduce the deficit by $1.8 trillion over the next decade and go somewhat beyond stabilizing the debt as a share of the economy, setting it on a slight downward path.  When coupled with the deficit-reduction steps that the President and congressional leaders already have enacted, this package would bring total deficit reduction achieved to $4.5 trillion over the decade.

The Administration has said that Congress could consider this deficit-reduction offer separately from the other proposals in the President’s 2014 budget.

While much attention in the coming weeks will focus on the deficit-reduction package, the rest of the President’s budget includes important proposals that also deserve serious consideration.  These include proposals to expand access to high-quality early education, funding to upgrade the nation’s transportation infrastructure, and measures such as the “Pathways Back to Work” fund to help people struggling in today’s labor market to prepare for and find jobs.  Taken together, the proposals are fully paid for and actually reduce the deficit slightly.

Click here for the full report.

House Budget Committee Chairman Paul Ryan says the safety net doesn’t do enough to promote work, but his budget — which gets nearly two-thirds of its $5 trillion in non-defense cuts from low- and moderate-income programs — proposes deep cuts in the very programs that help low-income working families make ends meet, raise their families, and provide better opportunities for their children.

As our new paper explains, the Ryan budget would:

• Allow important improvements in refundable tax credits to expire and potentially layer further cuts on top. Numerous studies have shown that the Earned Income Tax Credit (EITC), by “making work pay,” has raised employment rates, particularly among single mothers, and reduced welfare receipt.  January’s American Taxpayer Relief Act extended important improvements to the EITC and the Child Tax Credit (another tax credit available only to low- and moderate-income working families) through 2017. 

  The Ryan budget lets these improvements expire in 2018.The Ryan budget also requires hundreds of billions of dollars of unspecified cuts in the part of the budget that includes these refundable tax credits.  To meet this target, Congress likely would cut the refundable credits substantially.

• Add millions to the ranks of the uninsured. The Ryan budget repeals health reform’s coverage expansions and adds large cuts in Medicaid (and the Children’s Health Insurance Program) on top, greatly increasing the number of uninsured low- and moderate-income Americans.  Most of those affected would be in working households.

  These proposals would also increase work disincentives for some poor workers.  For example, working-poor parents in the typical state lose Medicaid eligibility when their earnings reach just 61 percent of the poverty line, or $11,900 for a family of three.  Under health reform, a parent who raises her earnings above this level could receive either continued Medicaid coverage (assuming the state takes up health reform’s Medicaid expansion) or subsidies to buy private coverage through an insurance exchange.  Under the Ryan budget, if she raises her income even to just $12,000, she would lose access to coverage in many states.

• Cut SNAP (food stamps) by nearly one-fifth. The Ryan budget converts SNAP to a block grant starting in 2019 and cuts funding dramatically.  If states absorbed the cut solely by restricting eligibility, they would need to drop 12 million to 13 million people from the program.  If they absorbed the cut solely by shrinking benefits, the reduction would be more than $50 per person per month in 2019.  That benefit cut — $1,800 for a family of three over the course of a year — would lower the maximum SNAP benefit to just 73 percent of the Agriculture Department’s estimate of the minimum amount a family needs to afford a bare-bones, nutritionally adequate diet.

  SNAP helps some 6.4 million working households afford food.  Given the depth of the cuts that states would have to make, it is a safe bet that millions of people in low-income working households would lose some or all SNAP benefits.

• Cut grants that help low- and moderate-income students afford college. The Ryan budget freezes the maximum Pell Grant award for ten years, proposes eligibility cuts that would make it harder for low-income students to qualify for the maximum grant, and makes deep cuts in Pell funding (see our paper for details).  These changes would result in many fewer students having access to grants and in smaller grants for those who do — limiting access to college, a key gateway into the middle class, for many low- and moderate-income students.  Once again, most of the students affected would be in working families.

With both parties seeking more deficit reduction, the safety net remains a potential target for cuts.  The Washington Post’s Glenn Kessler in recent days analyzed a report from Senator Jeff Sessions comparing safety net benefits to middle-class incomes.  We issued our own analysis of the Sessions report today.  Here’s the opening:

Senator Jeff Sessions (R-AL) recently posted to the Senate Budget Committee website a document that implies that programs targeted to low-income people provide lavish benefits that raise the typical poor household’s standard-of-living above that of the typical middle-income household.  The Sessions release, however, is deeply flawed; it substantially overstates the assistance that poor households receive.  Means-tested programs do not raise poor households anywhere close to a typical middle-income household’s standard of living.

The Sessions document derives its numbers by adding up the cost of a large number of programs that are targeted on low- and moderate-income households — or on schools and communities with large numbers of low- and moderate-income students or residents — and dividing the total cost of these programs (all of which it labels “welfare”) by the number of households below the official poverty line.  It claims this shows that we spend the equivalent of $168 per poor household per day — or more than $60,000 per poor household annually.  It then compares this per-household amount to median household income.

This comparison rests, however, on a series of serious manipulations of the data that violate basic analytic standards and are used to produce a potentially inflammatory result.  To produce its claims, the document Senator Sessions posted does the following:

• Counts payments to hospitals, doctors, nursing homes, and other medical providers — including payments for care for sick elderly people at the end of their lives and for people with serious disabilities who are institutionalized — as though these payments are akin to cash income that is going to poor families to live on. . . .

• Counts, as spending on poor people, benefits and services that go to families and individuals who are above the poverty line. . . .

• Counts the value of health coverage for low-income households but not for middle-income households. . . . .

Census data paint a very different picture.  The Census Bureau’s Supplemental Poverty Measure (SPM) — which counts non-cash and tax-based benefits as income, including the Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps), refundable tax credits, housing subsidies and the like, but not medical care — shows that:

• In 2011, the typical person in a family whose income was below the poverty line before means-tested benefits are counted remained 12 percent below the poverty line after the means-tested benefits are counted.  Moreover, the Supplemental Poverty Measure shows that even with these benefits, the typical poor person’s standard of living is 57 percent below that of the typical middle-income American.
• The SPM also shows that means-tested benefits lifted 20 million people out of poverty in 2011, but that the typical individual lifted out of poverty had income only 16 percent above the poverty line, far below the income level of the typical middle-class person.

Click here for the full report.

The Kaiser Commission on Medicaid and the Uninsured’s new annual survey of state eligibility policies in Medicaid and CHIP shows that income eligibility levels for working parents have continued to stagnate.  The median income level fell slightly, from 63 to 61 percent of the poverty line — $11,645 for a family of three.  For non-working parents, income eligibility remained at a dismal 37 percent of the poverty line — $7,063 a year for a family of three.

The median income level marks the halfway point in state income eligibility levels — where half the states fall above and half fall below.  As states consider whether to expand Medicaid, it’s important to understand where some of the states rejecting or leaning against expansion stand.  In Louisiana, for example, a parent would have to earn less than $4,582 a year to qualify; in Texas, $4,773; and in Idaho, $7,063.  Alabama, Florida, Georgia, Mississippi, and Utah also fall below the median.  In most of those states, childless adults are not eligible for Medicaid at all or only have limited coverage under waiver programs.

Some governors have balked at the expansion because it would add large numbers of state residents to their Medicaid rolls.  For example, Florida Governor Rick Scott’s office said that the number of people on Medicaid in Florida would nearly double if the state expands (from about 3.3 million today to more than 6 million). But large numbers of parents and childless adults would become eligible in Florida — where over half of poor adults are uninsured — because the state covers so few adults today.  Expanding Medicaid would change that and provide a pathway to health coverage for poor, uninsured working parents and other adults.

Twenty-three states (see map) received a total of roughly $300 million in federal performance bonuses this week for exceeding targets for enrolling more eligible children in Medicaid and removing obstacles that can prevent eligible families from applying for and renewing Medicaid and CHIP (Children’s Health Insurance Program) coverage.

The bonuses give states a powerful incentive to improve their eligibility and enrollment processes.

South Carolina, for example, first qualified for a bonus in 2011 after adopting “express lane eligibility,” meaning the state now renews some children’s eligibility for Medicaid using information it has already obtained and verified when determining the family’s eligibility for SNAP (formerly food stamps).  As a result, these families no longer have to submit the same information twice.

Since South Carolina adopted this new procedure, which saves time and effort for the state as well as families, more than 175,000 children have renewed Medicaid coverage without unnecessary paperwork.

States will make their health care programs even more accessible to eligible families in the next couple of years because of health reform, which requires all states to adopt several such measures by 2014 — such as using electronic data to verify beneficiaries’ continued eligibility for Medicaid and CHIP when they renew coverage.  You can find detailed information about the changes that states will make in Coordinating Human Services Programs with Health Reform Implementation: A Toolkit for State Agencies.