Low-Income Programs Would Bear the Brunt of Ryan Cuts

March 23, 2012 at 2:31 pm

Most of the cuts in House Budget Committee Paul Ryan’s new budget would come from programs serving lower-income Americans, a new CBPP report finds.  Here’s the opening:

62% of Proposed Cuts in Ryan Plan Come from Low-Income ProgramsHouse Budget Committee Chairman Paul Ryan’s budget plan would get at least 62 percent of its $5.3 trillion in nondefense budget cuts over ten years (relative to a continuation of current policies) from programs that serve people of limited means.  This stands a core principle of President Obama’s fiscal commission on its head and violates basic principles of fairness.

Not much has changed on this front from Chairman Ryan’s fiscal year 2012 budget plan released a year ago.  Then, too, Chairman Ryan proposed massive spending cuts, the bulk of which were in programs that serve low- and moderate-income Americans.  (Compared with last year’s plan, the cuts in low-income programs are larger in dollar terms but slightly smaller as a share of the total cuts.)

Click here for the full report.

When Is a Deal Not a Deal?

March 22, 2012 at 5:35 pm

With defense funding well above the Budget Control Act’s (BCA) funding caps in coming years, and non-defense discretionary funding very far below those caps, House Budget Committee Chairman Paul Ryan’s new budget bears little resemblance to the bipartisan agreement reached last summer (see graph).

Ryan Budget Would Raise Defense Funding Above Budget Control Act Caps, Cut Non-Defense Discretionary Funding Far Below

Debates over whether the Ryan plan is consistent with the BCA have focused on fiscal year 2013, in which the plan’s total discretionary funding is below the BCA cap.  But the Ryan plan departs far more from the BCA over the 2013-2021 period as a whole, shifting large amounts of funding from non-defense discretionary (NDD) programs to defense, while deeply cutting the total (see table).  The Ryan budget thereby walks away from the sole significant bipartisan deficit-reduction measure of recent years less than eight months after that measure was negotiated.

Table 1
Defense Increases, Non-Defense Discretionary (NDD)
Cuts Relative to the BCA’s Statutory Funding Caps
(In billions of dollars)
2013 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL
Defense 8 11 14 17 20 23 28 32 36 189
NDD -38 -115 -118 -120 -120 -124 -127 -130 -135 -1,026
Total -30 -104 -104 -102 -101 -100 -99 -98 -98 -837
Note: Figures may not add due to rounding.

The Ryan plan would breach the BCA caps on defense funding by $189 billion over the 2013-2021 period, bringing defense funding more than 5 percent above the level set by law.  And it would cut NDD funding by more than $1 trillion below the existing funding caps; in 2021, NDD funding would be 23 percent below the cap.  (Technically, the BCA has three NDD caps for each year to reflect three different aspects of NDD funding; our figures here combine the three.)

NDD covers all non-defense funding other than for “entitlement” programs, such as Social Security and Medicare.  It thus covers a vast array of federal activities:  biomedical and scientific research; veterans’ health care; most education; law enforcement and border patrols; national parks and forests; environmental protection; housing assistance; Head Start; job training; NASA; food, drug, workplace, and consumer product safety; and the Treasury, for example.

The caps discussed here do not reflect the automatic cuts (or “sequestration”) that the BCA calls for given the failure of last year’s “supercommittee” to recommend further deficit reduction.  But the Ryan plan’s NDD cuts are so deep that they would bring NDD funding 16 percent to 18 percent below the scheduled post-sequestration level from 2014 through 2021.

Some may argue that the Ryan budget does not violate last summer’s deal because the NDD caps are not floors; in other words, it would not breach the law for Congress to appropriate less than the cap, only more.  But claiming that last summer’s agreement could legally permit any funding level for NDD programs between zero and the caps — such as a level so low that it would require eliminating Pell grants, the FBI, or veterans’ health care, for example — is a technicality.  Such an outcome clearly is not what President Obama and many other congressional leaders thought they had negotiated last August.

More importantly, the Ryan budget clearly does breach the defense caps — and by a lot.  If policymakers believe that difficult bipartisan deals will be discarded only months after being worked out, then bipartisan agreements will become even harder to reach than they already are.

Ryan Budget Takes Big Bite out of Food Stamps

March 22, 2012 at 3:43 pm

Millions of people would lose part or all of their SNAP (food stamp) benefits under House Budget Committee Chairman Paul Ryan’s new budget, a new CBPP analysis shows.

The Ryan plan would cut SNAP — the nation’s most important anti-hunger program — by $133.5 billion or more than 17 percent over the next ten years.  (Click here for the state-by-state impact.)  Since more than 90 percent of SNAP expenditures are for food assistance, a cut of that size would require scaling back SNAP eligibility and/or reducing benefits.

To illustrate the size of the cut:

  • If the cuts came solely from new eligibility restrictions, more than 8 million people would need to be cut from the program, if the cuts began taking effect in 2013.
  • If the cuts came solely from across-the-board benefit cuts, SNAP benefits would have to be cut by about $22 to $27 per person per month in 2016 dollars.

Contrary to Chairman Ryan’s claim that large SNAP cuts are necessary to rein in the program, the recent rise in SNAP expenditures is temporary and mostly reflects the depth of the recent recession.

  • As the first graph shows, the growth in SNAP participation peaked in the fall of 2009 and has slowed to a path that suggests the caseload may start to decline in the near future.
  • CBO Projects SNAP Will Shrink as Share of GDP

  • As the second graph shows, the Congressional Budget Office projects SNAP to return essentially to pre-recession levels as a share of the Gross Domestic Product once the economy fully recovers.  Thus, SNAP isn’t contributing to the nation’s long-term budget problem because it is projected to grow no faster than the economy over time.

SNAP Participation Growth Has Slowed Dramatically Since the End of the Recession

President’s Budget Would Hike Rents on Poorest Households

March 22, 2012 at 1:00 pm

More than half a million of the nation’s poorest families would face higher rents under the President’s proposal to raise the minimum rent in the rental assistance programs that the Department of Housing and Urban Development (HUD) administers.

Our new report takes a detailed look at the proposal, including its state-by-state impact.  The affected families include 725,000 children and are disproportionately minority.

The proposal to raise the minimum rent from a maximum of $50 to a mandatory $75 a month  — with no discretion for state and local housing agencies to set a lower required payment — would have the biggest impact in states that provide relatively little help to the most vulnerable families and individuals.

Nationally, about 12 percent of households receiving HUD-funded rental assistance would face higher rents.  But the percentage ranges from nearly 24 percent in Tennessee, which has the nation’s second-lowest TANF benefit level as a share of the poverty line and no General Assistance program, to 2 percent in New York — which has the nation’s highest TANF benefit (48.8 percent of the poverty line ) and is one of only 12 states that provide General Assistance benefits to childless employable adults.

Proposed Rent Increase Would Further Impoverish Poorest Households Receiving Federal Housing Assistance

As I noted earlier, this proposal comes even as a study finds that the number of U.S. families with children living on less than $2 per person a day — a standard the World Bank uses to measure serious poverty in third-world countries — has more than doubled since the mid-1990s, to roughly 1.5 million.  For a family of three at that level (that is, living on $6 a day), a $25 per month rent increase means that it will have only $3.53 per day to spend on other necessities, as the graph shows.

In fact, the graph almost perfectly illustrates the impact in Tennessee, where a family of three receives only $185 a month in TANF benefits — or about $2 per person per day.

The worsening of severe poverty rebuts the Administration’s rationale that minimum rents should rise to reflect inflation.  Rents have indeed gone up in recent years, but the incomes of extremely poor families generally haven’t, because of stagnating wages and shrinking cash assistance.

The Administration’s claim that its proposal is needed to save money doesn’t hold up either.  For various reasons, the proposal would likely save less than half of the Administration’s $150 million estimate next year.  Surely policymakers can find a better way to secure $75 million than by making some of the poorest Americans still more destitute.

The Massive Hidden Safety-Net Cuts in Chairman Ryan’s Budget

March 21, 2012 at 4:44 pm

A key misunderstood element of House Budget Committee Chairman Paul Ryan’s budget plan is his proposed cut in spending for “other mandatory” programs  — non-discretionary programs other than Social Security, Medicare, Medicaid, and other health programs.  His plan shows almost $1.9 trillion in cuts in such programs over the next ten years compared to what President Obama’s budget proposed for such programs.  His plan does not provide any details about specific program cuts that would add up to that very large amount, although Chairman Ryan reportedly indicated that he would get a significant portion of the savings from not accepting various policies that the President proposed.

But any notion that you could get most of the $1.9 trillion in savings in this category simply by rejecting the President’s proposals for new spending would be mistaken.  In fact, the Ryan plan proposes to cut spending for non-health mandatory programs by $1.2 trillion below the spending projected for these programs under current policies.

Moreover, you cannot achieve those savings without making very deep cuts in the crucial safety-net programs in this category, such as SNAP (formerly known as food stamps), Supplemental Security Income for the elderly and disabled poor, Temporary Assistance for Needy Families, the school lunch and other child nutrition programs, and unemployment insurance.

At today’s House Budget Committee markup, Chairman Ryan’s staff indicated that his plan assumes a $133 billion cut in SNAP over the next ten years.  In a document outlining his plan — The Path to Prosperity — and in response to press questions, Chairman Ryan also suggested that cuts in farm programs and changes in federal employee retirement could contribute to the required savings (although he provided no details about the policies that he assumed or the savings they would achieve).  But these two areas could likely provide only a relatively modest amount of savings.  Total projected spending for farm programs over the next ten years is $165 billion.  While we have long supported substantial cuts in farm programs, cutting more than a modest portion of the projected spending for those programs isn’t politically feasible.  (The Bowles-Simpson commission seemed to agree; it proposed significant cuts in Social Security, Medicare, defense, and many other programs, but to cut farm programs by only $10 billion over ten years.)

The federal employee retirement program is more politically vulnerable — Bowles-Simpson recommended $93 billion in savings from changes in federal civilian and military retirement (most of which would come in the form of an increase in revenues, although Bowles-Simpson displayed the savings as a cut in mandatory spending, which Chairman Ryan presumably is assuming as well).   Assuming about $100 billion in savings from federal retirement programs, $133 billion in savings from SNAP, and $50 billion in savings from farm programs (five times what was acceptable to Bowles-Simpson commission members), an additional $900 billion in savings under the Ryan plan would have to come from non-health mandatory programs.

Of the $900 billion, a very small amount could come from increases in fees or asset sales, but the bulk would have to come from the safety-net programs that represent most of the remaining spending in this category.  Put simply, there is no way to generate the required savings without extremely severe cuts in these programs, on which the most vulnerable Americans depend.  Cutting these programs sharply would be an appalling idea — particularly while the wealthiest Americans would get big tax cuts — but House passage of a budget that requires these cuts without a full and honest debate about them, and without leveling with policymakers and the public about what cuts the Ryan budget envisions in these programs, would be a real travesty.