House Spending Cuts Would Mean Massive Job Losses

March 2, 2011

I suppose this is self-evident, but I think it’s worth saying. Spending cuts as deep and wide as the House Republicans want would throw many thousands of people out of work.

Based on the total non-security cuts that went to the House floor, the Economic Policy Institute estimated somewhat over 800,000. Mark Zandi, Chief Economist at Moody’s Analytics, projects job losses at 700,000 by the end of 2012 — this apparently based on the bill the House passed.

Add to the jobless an uncounted number of workers who would be subject to reduced work hours or furloughs.

In the latter camp would be employees in the Social Security Administration. So much for getting timely action on benefits claims — let alone hearings on the large percentage of disability claims the agency initially rejects.

But it’s not only federal employees that would be affected. Think of all the state and local public service workers who’d find themselves on the unemployment rolls — Head Start and K-12 teachers, staff in one-stop centers for job seekers, etc.

A fact sheet from the Senate Democratic Policy and Communications Center says that the Head Start and Title I (Education for the Disadvantaged) cuts alone could cause an estimated 65,000 layoffs. Not a disinterested source, but not necessarily out of the ballpark either.

And then there are all the private-sector workers indirectly paid by federal grants to the states, e.g., the professionals and other staff in the community health centers that would close or shrink. The centers’ national association estimates job losses totaling 7,434.

Add to these the jobs that would be lost in the maternal and child health centers the Republicans would totally defund. And the 80,000 public service jobs funded by AmeriCorps — also targeted for extinction.

And what about the construction workers who won’t be rehabbing public housing or building new affordable housing because of cuts in the Department of Housing and Urban Development’s budget?

And the workers that we devoutly hope will be maintaining the Washington metro area’s rapid transit system, but probably won’t be if the proposed $150 million WMATA cut is approved?

I could go on generating examples, but I think you’ve got the picture.

Confronted with the loss the federal jobs, House Majority Leader John Boehner replied, “So be it. We’re broke.” Which is stuff and nonsense. But then so is the notion that the proposed spending cuts will reduce the deficit that’s got our policymakers — Republicans and Democrats alike — so agitated.

When people don’t work, they don’t owe as much — or anything — in income taxes. They also don’t buy as much. Business profits go down and, with them, corporate tax payments.

So federal revenues decline, as they did when the recession set in. Meanwhile, mandatory safety net spending, e.g., for food stamps and Medicaid goes up, because more jobless people means more people poor enough to qualify.

So how is the deficit shrinking?

I think just about everyone agrees that federal spending is on an unsustainable upward curve. But the programs the House Republicans would slash have virtually nothing to do with that. The pie chart and analysis on Dustin’s Our Dime blog show why.

Maybe the House Republican leadership has put itself in a box. It pledged to immediately cut at least $1 billion in federal spending while holding the military and programs for veterans and seniors harmless.

This helped get a bunch of Tea Partiers elected. And now they’re insisting that the House make good on the pledge, though the very conservative chairmen of the Budget and Appropriations Committees apparently didn’t want to go there — at least not during the shrinking remainder of this fiscal year.

Whatever the case, I think EPI is right when it warns that the House proposal would magnify the ongoing labor market crisis.

Also right when it says the proposal “suggests that Americans take on unnecessary pain with no long-term gain.” I’d just add that some Americans are going to have lots more pain foisted off on them than others.


What Would DC Lose Under The House Budget Bill?

February 26, 2011

I’ve been trying to get my mind around what the spending cuts passed by the U.S. House of Representatives would mean for the District of Columbia.

Still working on it. There are, after all, a great many cuts and many different formulas for distributing such funds as remain.

Fortunately, the Center on Budget and Policy Priorities has come to the rescue with big parts of the answer — a state-by-state breakout of the major cuts in five broad categories.

It’s an heroic effort, but not exhaustive. Missing, for example, are breakouts of the $747.2 million cut to WIC (the Special Supplemental Nutrition Program for Women, Infants and Children)* and cuts to several other health-related programs.

One of these would totally wipe out long-standing federal funding for family planning and related preventive health care. Another would cut funding for community health centers by $1 billion — about a third of their total federal funding, says Joan McCarter, Senior Policy Editor at Daily Kos.

The CBPP figures reflect the continuing resolution as it was introduced. The version of House passed included numerous amendments. But so far as I know, only one of them affected the cuts CBPP calculated. I’ll post an update if I learn I’m wrong about this.

So, with caveats, here are some of the top-line figures for programs that are especially important to low-income District residents.

Education

The District would lose a total of $8.6 million in grants for K-12 education programs. (I’m assuming here that the funds the House restored for special education would be offset by the larger funding cut approved for school improvements.)

About 44,000 local college students would see their Pell grants reduced or altogether eliminated. The maximum grant they could receive would be $845 less than it is now. Because all grants are based on the maximum, the cut would affect all recipients.

Vocational and adult education programs would be cut by a total of $190,000.

Workforce Development

The job training and related services funded under the Workforce Investment Act would take a much bigger hit than the vocational and adult ed. programs — bigger even than CBPP originally reported.

WIA programs operate on a fiscal year that begins on July 1 — three months before new federal appropriations become effective. So they customarily get advance funding to carry them through. The continuing resolution doesn’t provide any.

So according to CBPP’s recalculation, the District would stand to lose $8.2 million for its WIA Fiscal Year 2011 program year. An estimated 20,900 adults now eligible would lose opportunities for skills assessments, training, job search help and the like, as would about 450 youth.

Affordable Housing

The District’s capital fund grant for public housing would be cut by $9.2 million. This is the grant that helps cover the costs of upgrading and repairing public housing units.

An additional $900,000 would be lost for affordable housing development and rental assistance funded under the HOME Investment Partnerships program.

Community Development

The District would also lose $12.4 million of the funds it receives from the Community Development Block Grant. That’s about 63% of what it received in Fiscal Year 2010.

The block grant can be used for a broad range of activities, including affordable housing development, neighborhood revitalization, improvements to public facilities like neighborhood centers and assistance to businesses for economic development activities that will benefit principally low and moderate-income people.

Mental Health and Substance Abuse

Two other block grants provide the District with funding for mental health services and for substance abuse prevention and treatment. Both would be cut, leaving the District with $471,000 less.

And, once again, the District would be banned from using its own funds for needle exchanges to help control the spread of HIV/AIDS.

Funding Exclusively for the District

CBPP understandably doesn’t cover the impending cut to funding the District receives because it’s the nation’s capital — and a unique state-city hybrid created and still controlled by Congress.

Under the continuing resolution, federal payments to the District would reportedly be cut by more than $80 million. Our Metro system would lose an additional $150 million.

“Another serious blow to the District’s precarious financial situation,” says Mayor Vincent Gray. He warns that the cuts “will probably result in the elimination of key services for residents of the District.”

Unquestionably, especially if he’s talking about the total prospective losses.

On the brighter side, the District almost certainly won’t lose all the funds the pending continuing resolution would take away. The Senate won’t pass the bill as written. President Obama has all but said he’d veto it if the Senate did.

However, the House Republican leadership has made clear that it won’t agree to even a short-term bill to avert a government shutdown unless it includes some cuts in current spending levels.

As so often in these cases, low-income people are likely to get thrown under the bus.

* This is the figure in a just-released budget report by the Coalition on Human Needs. CBPP’s overview for the state-by-state tables and my own calculations put the figure at a rounded-down $752 million.

UPDATE 1: After posting this, I found a state-by-state breakout for the cut to community health centers. According to the national association that represents them, the District would lose $865,826, and 3,755 patients would lose access to care.

UPDATE 2: I originally reported that K-12 education would be cut by $5.4 million. This was an error on my part. The correct figure is in the text above.


Benefits Will Jump Start Economic Recovery

January 29, 2009

The Coalition on Human Needs has done us all a great service. It has issued a summary of the provisions in the House economic recovery package that will benefit low-income people and others at immediate risk of hardship. Anyone who’s tried to read the legislation–or even the Appropriations Committee’s summary–knows how useful this is.

CHN also identifies shortcomings in the package, including the short shrift given to affordable housing. No funding for additional housing vouchers, despite the rising tide of homelessness. No funding to support the construction of new affordable housing, despite the job creation potential. To me, these are glaring gaps.

However, CHN’s most important message is that the provisions targeted to low-income people and laid-off workers will do more than alleviate hardship. Combined with proposed increases for K-12 education programs, they will save or create nearly two million jobs.

This is because they will quickly put money into the hands of people who will spend it to meet their needs. Mark Zandi, chief economist for Moody’s Economy.com has translated this obvious truth into dollars and cents. He says, for example, that a $1.00 increase in food stamps will generate an estimated $1.73 in near-term economic growth.

The Economic Policy Institute has crunched the numbers another way. Its analysis for CHN shows that the food stamp provisions in the House package will save or create about 185,000 jobs. Think grocery store clerks, drivers for distribution companies, workers in food processing plants, etc.

Experts, including Zandi and the Congressional Budget Office, say that tax cuts are a less effective economic stimulus. CBO is particularly unenthusiastic about reductions in the corporate tax rate. As it says, businesses will not spend more money on labor or produce more just because they have more after-tax income. They need increased consumer demand. And that’s what the proposed food stamps increase and other measures targeted to low-income people will deliver.

Nevertheless, Congressional Republicans want less spending and more tax relief in the economic recovery package. And on the House side, they clearly won’t budge. Not a single Republican voted in favor of the package the House passed yesterday.

Now, there’s a reasonable argument to be made for paring down the spending part to focus it more on jump starting the economy and perhaps also for expanding the tax part. But substituting tax relief for the major measures CHN endorses should be a non-starter. Fortunately, it looks as if it will be.


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