Waiting for the Other Shoe to Drop

Analysts, pundits and press are reporting on daily progress — if we can call it that — toward a federal budget for the upcoming fiscal year.

Meanwhile, the entire panoply of programs that depend on annual appropriations are at high risk of automatic across-the-board cuts come January 2013. So are some so-called mandatory programs, i.e., those whose funding is assured by the laws that created or renewed them.

The cuts would be the first round in an annual series — divided between defense and non-defense, i.e., everything else the federal government spends money, except certain specific programs and interest on the debt.

The Center on Budget and Policy Priorities estimates the initial hit to the non-defense discretionary programs at $38.7 billion — these on top of the cuts Congress has already made.

By the end of the series, in 2021, cuts to these programs would total an estimated $294 billion. Congress would presumably try to hit the reduction targets. Across-the-board cuts would slice off any excess.

As you may know, Congress agreed to the automatic cuts as part of the Budget Control Act — the compromise that resolved the stalemate on the debt ceiling last August. But it didn’t intend for them to happen.

Sequestration — the technical name for across-the-board cuts — is a blunt instrument. Nobody likes it.

In fact, it was put into the BCA to give the Super Committee a super incentive to come up with a more sensible plan for reducing the deficit.

As I’m sure you do know, the incentive didn’t work. So now Congress has to decide whether to let sequestration go forward or pass an alternative the President will sign.

The President himself as an alternative in his proposed budget — hit the deficit reduction targets by a mix of spending cuts and revenue raisers.

In the latter category we’ve got tax increases on upper-income filers and some corporate tax loophole closers, but also initiatives that would increase taxable income by getting more people back to work.

The Ryan-Republican budget plan includes a very different alternative — “reprioritize sequester savings,” as Ryan’s spokesman puts it.

Translated out of double-speak, this means give defense more than the Pentagon wants and cut both discretionary and mandatory non-defense programs well below the levels the BCA would require — a whopping $261 billion more over the first 10 years.

Cuts to mandatory programs would include some that are now shielded from the across-the-board cuts — Medicaid, for example, and SNAP (the food stamp program).

Well, neither of these plans will get enacted. And large majorities in the House swiftly dispatched five others.

So unless something quite remarkable happens — or Republicans sweep the November elections — the across-the-board cuts the BCA mandates is what we’ll have.

What would they mean for programs that serve the needs of low-income and other vulnerable people? A new report by the Coalition on Human Needs offers a tentative answer.

I’ll return to it in another post, but you can guess the drift from the title CHN chose — Self-Inflicted Wounds.

They’re wounds not only to low-income people, but to many of those still hanging on by their fingernails in the middle class. And they’re wounds to our economy now and for the long term.

Take a look at the projected nationwide cuts and you’ll see what I mean.

Why I’ve Little to Say About the Ryan-Republican Budget … But Say It Anyway

I feel I ought to write something about the Ryan-Republican budget plan. I’ve been advised to call it that because it represents the platform Republicans are running on.

I’ve  read the Path to PovertyProsperity twice now. Both times got infuriated, which usually gets my blogging juices flowing.

But I’m stuck for a fresh topic. So I’ll write about that because the reasons are telling.

Proposals Replicate Last Year’s

One reason it’s hard for me to figure out what to write is that the new budget plan is in many ways the same as last years — at least for the issues I cover.

As you’ve probably read, it does take a new tack on privatizing Medicare. But the end results would be the same — costs increasingly shifted to seniors, ultimately less health care — and death of the traditional Medicare option the plan supposedly preserves.

So far as safety net programs are concerned, the two the Path gives specifics about are basically rehashes of the 2011 Path proposals.

Change Medicaid from a cost-sharing program to a block grant. Link increases in federal funding to population growth and the overall inflation rate rather than to health care costs. And let states do whatever to cope with the cost crunch.

Well, I wrote about that last year.

The Center on Budget and Policy Priorities has updated figures, but the bottom line is still the same — many millions of low-income people without health insurance, fewer services and/or higher co-pays for those fortunate enough to still qualify.

Same deal for the food stamp program. Once again, the budget plan would convert it to a block grant, using the deeply-flawed Temporary Assistance for Needy Families program as a model.

There’d be new work requirements for participants — and time limits, even apparently for the nearly 30% of households that have income from work. Also apparently for those too young, too old or too disabled to work — well over half of all participants.

And again federal funding would be capped at a level far below projected costs.

But I’ve already written about this attack on the safety net too.

The only news is that the block grant would kick in one year later and cut federal spending by more — at least $133.5 billion over the first 10 years, rather than the $127 billion estimated last year.

Plan Lacks Specifics

The other reason I find it hard to write about the budget plan is that it’s egregiously short on specifics.

The food stamp program, for example, is lumped into a category called “other mandatory,” i.e., all programs that don’t depend on annual appropriations for funding, except for Social Security, Medicare, Medicaid and a couple of other health care programs.

Jim Horney, CBPP’s Vice President for Federal Fiscal Policy, tells us that the budget plan reflects $1.2 trillion less than projected spending for these programs under current policies.

So even if one accepts Congressman Ryan’s assumed savings in farm subsidies and the federal retirement plan, there’d still be $900 billion in savings unaccounted for.

Where would they come from? Subsidized school meals and/or other child nutrition programs? Supplemental Security Income for low-income elderly and disabled people? Unemployment insurance? TANF (again)?

All of the above?

The same question mark hangs over non-defense programs that depend on annual appropriations — education and job training, housing assistance, veterans benefits, food safety, law enforcement, highways and a whole lot more.

Funding for these programs would be cut $1.2 trillion more than under the caps Congress agreed to last August. Where would the ax fall? Or rather, how close to the ground — and when?

Drastic Changes Deserve Informed Debate

Speaking of the mandatory programs, Horney concludes that “it would be a real travesty” to pass a budget like the Ryan-Republican plan “without a full and honest debate about [the cuts] and without leveling with policymakers and the public what cuts the … budget envisions.”

I think the same is true for the so-called non-defense discretionary programs. True, it’s up to the House Appropriations Committee and its subcommitees to decide exactly how to apportion the cuts.

But we ought to be told straight out how the Ryan-Republican budget would transform our country — because it surely would.

A preliminary analysis by the Congressional Budget Office indicates that, by mid-century, there’d be virtually no funding left for anything except defense, Social Security, the major mandatory health care programs and interest on the debt.

The rest of the federal government would, as arch-conservative Grover Norquist wishes, have been shrunk so small it could be drowned in a bathtub.

Surely this merits more debate than the annual budget process allows — and a full, frank accounting to base it on.

UPDATE: After I posted this, I discovered that the House Budget Committee had published a report that essentially spells out the Fiscal Year 2013 plan in greater detail. It says that block granting the food stamp program would save $122.5 billion over the first 10 years.

Food Hardship Rate Rises Nationwide, Drops in DC

The latest food hardship report from the Food Research and Action Center delivers some bad news for the nation as a whole and some moderately good news for the District of Columbia.

Food Hardship Nationwide

Nationwide, the food hardship rate increased somewhat in 2011, hitting 18.6% of households surveyed. This means that nearly one in five at some point during the year didn’t have enough money to buy the food the family needed.

The annual rate masks the extent of the upward trend. The food hardship rate during the first quarter of the year was 17.9%. By the fourth quarter, it had risen to 19.4%.

Ongoing high unemployment and underemployment rates account for part of the increase, FRAC says. But rising food prices and the freeze in food stamp benefit increases were also factors.

Costs of the items in the Thrifty Food Plan  market baskets rose 6.2% during 2011. That would ordinarily lead to an increase in food stamp benefits.

But when the Recovery Act boosted the benefits, it also suspended the annual food cost adjustments. Food stamps thus lost 6.2% of their purchasing power last year, though they were still worth more than they would have been without the boost.

Food Hardship in the District

Here in the District, the food hardship rate dropped from 18.9% in 2010 to 16.5% in 2011.

Last year, the District was right in the middle of FRAC’s state rankings. Now it’s slightly below the middle. Twenty-seven states had higher food hardship rates. In 17 of them, rates were at or above 20%.

As I’ve remarked before, the state ranking is, for the District, something of an apples to oranges comparison, since the District is only a city, notwithstanding its various state-like functions.

Fortunately, FRAC also provides food hardship rates for Congressional districts — these reflecting two-year averages to compensate for relatively small survey samples.

Here the District is again somewhat below the median, with a ranking of 295, based on a two-year average of 15.8%.

Nothing to stand up and cheer about. But a whole lot better than the 33.3% in the top-ranking district, which (in gerrymandered fashion) embraces the northern and eastern parts of Houston.

Policy Implications

So what’s the takeaway? Nothing new, but nonetheless important.

It’s crucial, FRAC says, to grow the economy in a way that provides full-time jobs at decent wages. At the same time, we need to strengthen income supports, e.g., unemployment insurance, low-income tax credits and Temporary Assistance for Needy Families.

Federal nutrition programs must be strengthened as well so that they reach more households in need and “with more robust benefits.”

For the long term, the latter would involve changing the basis for calculating food stamp benefits — a FRAC recommendation I’ve been harping on for some time.

More immediately, however, Congress has a Fiscal Year 2013 budget to pass.

The President has again recommended that it restore the months it shaved off the boost to help pay for the reauthorized Child Nutrition Act.

Also (again) that it temporarily suspend the time limit that now jeopardizes food stamp benefits for many poor able-bodied adults without dependents.

He proposes modest increases for some key child nutrition programs, including WIC (the Special Supplemental Nutrition Program for Women, Infants and Children).

He’s also proposing a bit more for TEFAP (the Emergency Food Assistance Program) — perhaps enough to sustain, at the current level, the stream  food products that flow to our country’s severely stressed pantries and soup kitchens.

But, as FRAC tactfully observes, “some in Congress” are proposing reductions in federal nutrition programs.

We’re told to expect a House budget plan much like last year’s. That would mean, among other things, a food stamp block grant structured to cut federal spending for the program by some $127 billion over the first ten years.

Some other programs — WIC and TEFAP, for example — would be slated for cuts. They’re doubly vulnerable, since they’re not protected from the across-the-board cuts that will kick in next January.

No doubt we’ve got to grapple with the projected long-term deficit. And the short-term prospects for tax revenues are fair to middlin’.

But “even in difficult times,” FRAC says, “we have the resources to eliminate hunger for everyone.” We could, in fact, gain at least $167.5 billion a year if we did.

Knowing this, the new food hardship figures should prompt second thoughts by our decision-makers — even those safety-net-slashing “some in Congress.”