Revised March 28, 2003
THE HUMAN COSTS OF CUTS IN MAJOR LOW-INCOME
CONTAINED IN THE HOUSE BUDGET RESOLUTION
The House Budget Resolution requires various
Congressional committees to pass legislation making $265 billion in cuts
over the next ten years in entitlement, or mandatory, programs. The
Senate budget contains no such provisions.
Approximately 62 percent of these
cuts $165 billion are slated to come from programs for low-income
families and individuals. These include programs that provide nutrition
assistance, income support, health care, and child care to families with
children (especially working poor families), as well as to poor elderly
individuals and people with disabilities. These cuts would remain in effect
at least through 2013, unless a future Congress enacted another law
overturning some or all of them. (The House
Budget Resolution also makes $244 billion
in cuts in domestic discretionary, or annually appropriated, programs,
below the 2003 levels, adjusted for inflation. The Senate budget contains
$159 billion in domestic discretionary cuts. A number of programs that
assist low-income families are discretionary and likely would be affected by
these cuts as well. This report, however, focuses entirely on the cuts to
entitlement programs. This report examines the House cuts in entitlement
in Low-income Entitlement Programs Under the House Budget
2004 - 2013
Dollar Cut in the Year When Cuts Would be Deepest
Supplemental Security Income
Income Tax Credit
Temporary Assistance for Needy Families
(including school lunches)
Care and Adoption Assistance
Like all budget resolutions, the
House budget resolution is a broad blueprint. It does not provide details
or directives about exactly how Congress should achieve these
substantial cuts in each of these low-income entitlement programs. Instead,
it directs each of a number of Congressional committees to pass legislation
that achieves a specific level of cuts in entitlement programs under that
committees jurisdiction. The House budget also shows how these cuts are
assumed to be distributed across 20 components of the federal budget, known
as budget functions. (The exact amounts of the cuts specified for each
budget function are not binding, but they indicate the manner in which the
Budget Committee assumes its budget-cut
targets will be reached).
This analysis assumes that all
entitlement programs within a given budget function would be cut by
approximately the same percentage; we make this assumption because House
Budget Committee Chairman Jim Nussle has
stated that the entitlement reductions in the House
Budget Resolution are generally assumed to
A Congressional committee could choose to make a smaller cut (or none at
all) in a given program, but then it would have to make deeper cuts in
another program or programs under its jurisdiction to achieve the amount of
savings it is required to produce.
This report illustrates the
magnitude of the cuts that the House
Budget Resolution would require in various
low-income programs. It does so by comparing the size of the cuts in these
programs with the cost of key components of the programs. It finds, for
example, that in the year in which the required cuts would be deepest:
The cut in the Food Stamp Program, if achieved by reducing the
maximum food stamp benefit, would lead to a reduction in the average
benefit per person from an already lean 91 cents per meal down to 84 cents
The cut in the Supplemental Security Income program, if
achieved by reducing the number of SSI recipients, would lead to the
elimination of SSI benefits for 476,000 low-income elderly individuals and
people with disabilities. Alternatively, if the cut were achieved by
reducing the maximum SSI benefit, SSI recipients with no other income would
see their benefit and their total income fall from an already low 74
percent of the poverty line to 70 percent.
The cut in child care funding, if achieved by reducing the
number of children assisted, would lead to the elimination of child care
assistance for 268,000 low-income children.
The reduction in Medicaid, if achieved entirely by reducing
the number of children covered, would lead to the elimination of health
coverage for 13.6 million children. Alternatively, if the cut were achieved
by reducing the number of low-income elderly individuals and people with
disabilities who receive long-term care through Medicaid, it would lead to
the elimination of care for about one-fourth of such individuals.
The cut in TANF, if achieved by reducing the number of slots
in welfare-to-work programs, would require the elimination of about 340,000
such slots. (It is worth noting that states would be required to expand
their welfare-to-work programs significantly under the TANF reauthorization
bill that the House of Representatives passed earlier this year.)
The cut in child nutrition programs, if achieved by reducing
the number of children eligible for free school lunches, would lead to the
elimination of free lunches for 2.4 million low-income children.
The cut in foster care and adoption programs, if achieved by
reducing the number of children eligible for foster care assistance
payments, would lead to the elimination of benefits for 65,000 abused and
The cut in child support enforcement, if achieved by reducing
the funding available for enforcement activities, would be projected to
reduce child support collections by $1.6 billion.
These examples, as well as
additional examples provided in this report, are illustrative. They are not
intended as predictions of exactly how Congress would achieve the cuts
called for in the House
Budget Resolution. But they provide a
sense of the magnitude of the cuts that would result from the House Budget
In coming days, members of the House
and Senate will be meeting to craft a
Budget Resolution Conference Report that
will then be considered by both chambers. As policymakers consider how to
construct a final
Budget Resolution, the effects that these
low-income entitlement cuts would have on poor households and particularly
on poor families, children, elderly individuals and people with
disabilities, who make up the vast bulk of the people served by these
programs should be carefully considered.
Budget Resolution assumes that the Food
Stamp Program would be cut by $12.5 billion between 2004 and 2013.
The deepest food stamp cuts are scheduled for fiscal year 2010, when they
would reach almost $2 billion.
If this cut were
achieved by reducing food stamp benefit levels across the board, it would
reduce the average benefit per person that food stamps provide from 91
cents per meal to 84 cents per meal.
Even after the
effects of inflation are taken into account, the $2 billion cut that would
be required in 2010 is more than the total food stamp benefits provided in
fiscal year 2002, or expected to be provided in 2003, to all low-income
households in 19 states and the District of Columbia: Alaska,
Connecticut, Delaware, Hawaii, Idaho, Iowa, Kansas, Maine, Montana,
Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Rhode Island,
South Dakota, Utah, Vermont, and Wyoming.
The House Agriculture Committee has jurisdiction over only
one other significant nutrition program that is an entitlement-type program
the $140-million Emergency Food Assistance Program (TEFAP) and thus
could not shield the Food Stamp Program from the significant cuts the House
Budget Resolution requires. TEFAP
effectively is the only other program (outside of farm programs) that
the Committee could cut to contribute to the level of savings required by
Budget Resolution. But even if the
Agriculture Committee zeroed out these TEFAP funds and eliminated all
purchases of food for TEFAP, it would achieve less than one-tenth of the
required savings. Moreover, cutting the TEFAP program itself would be
highly problematic. TEFAP provides food to food banks and through them to
soup kitchens and food pantries across the country. With less food, these
providers would have to reduce the number of families served or the amount
of food they provide to the nations neediest people, and would do so at the
very time that the need for food assistance would be rising due to the cuts
being made in other low-income programs such as food stamps and SSI.
Supplemental Security Income
The SSI program provides basic income assistance
to low-income elderly individuals and people with disabilities. Under the
Budget Resolution, the SSI program would be
subject to $18.5 billion in cuts over the 2004 - 2013 period if the
SSI program received the same percentage cut as the other programs in the
same budget function. The cuts in SSI would be deepest in 2010, when they
would total $2.8 billion.
If these savings were to be achieved by reducing the number
of people eligible for SSI benefits, some 476,000 low-income elderly
individuals and people with disabilities would have to be cut from the
If these savings were achieved by reducing the maximum
benefit, SSI recipients with no other income would see their benefit fall
from an already low 74 percent of the poverty line to 70 percent. About
half of SSI recipients receive the maximum SSI benefit level because they
have no or almost no other income.
The federal government provides
states with both entitlement funding and discretionary funding for child
care through the Child Care and Development Block Grant. Under the House
Budget Resolution, entitlement funding for
child care would be cut $1.2 billion over the 2004 2013
period if the child care block grant received the same percentage cut as
other programs in this budget function. When compared to the CBO baseline,
the reduction in child care entitlement funding would be deepest in 2010,
when it would total $200 million. (Because the House
Budget Resolution also calls for
substantial cuts in overall discretionary spending, the funding for child care
that is provided from the non-entitlement or discretionary side of the
budget also could be cut.)
Would Some Programs
Be Protected From Cuts?
Supporters of the House Budget Resolution
sometimes claim that a certain program will be protected from cuts
under the Budget Resolution. Although the committees with jurisdiction
over these low-income entitlement cuts would have some flexibility about
which programs they cut, they would be required by the Budget
Resolution to craft legislation (and pass it out of the committee) that
achieves a specified level of cuts. For example, the House Budget
Resolution requires the Ways and Means Committee to pass a bill
that includes $61.5 billion in cuts. Some $17.8 billion of this amount
could come from a non-controversial extension of expiring
customs-related fees. The remaining $43.7 billion would have to come
from cuts in programs under the Committees jurisdiction.
The main programs under the jurisdiction of
the Ways and Means Committee include Social Security, Medicare,
Unemployment Insurance, and a set of low-income entitlement programs
such as SSI, TANF, the child care block grant, foster care and adoption
assistance, and the Social Services Block Grant. The Budget Act
prohibits making cuts in Social Security in a budget reconciliation
bill, and the Budget Resolution includes an explicit assumption that
Medicare will not be cut. Thus, to satisfy the Budget Resolution, the
Ways and Means Committee effectively would be required to impose very
large cuts in low-income programs. The Committee could decide to spare
a particular program such as TANF but then other low-income
entitlement programs would have to be cut more deeply.
Another example concerns Medicaid. The
House Budget Resolution requires that the House Energy and Commerce
Committee, which oversees Medicaid, cut $107 billion from programs under
its jurisdiction. The House Resolution also indicates that entitlement
spending in Function 550 (Health) is to be reduced by $98 billion over
ten years. Exempting health care for military retirees from the
reduction (because it falls under the jurisdiction of the House Armed
Services Committee, which is exempt from having to make cuts) and
distributing the $98 billion in reductions proportionally over the
remaining programs in that budget function yields the estimate that
Medicaid will be cut by $92 billion over the FY 2004 - 2013 period. If
the Committee wished to cut significantly less than this $92 billion
from Medicaid, it would have great difficulty doing so; it would be hard
for the Committee to find other programs from which to obtain sufficient
savings for the Committee to meet its budget-cut target, since Medicaid
is the only large entitlement program under its jurisdiction.
The $200 million cut represents a reduction in
funding below the levels reflected in the Congressional
Budget Office baseline. The CBO baseline
assumes that child care entitlement funding will be frozen for the
next ten years at its current funding level of $2.7 billion a year, with no
adjustment for inflation. Because the cost of the wages and salaries of
child care workers (and the cost of renting space for child care centers)
rises over time with inflation, the number of child care slots that states
can fund would fall each year under the funding levels reflected in the CBO
baseline, even if no cuts are made below the baseline levels.
Under the House
Budget Resolution, states would
be able to provide child care subsidies to 268,000 fewer children in
2010 than can currently be served with child care entitlement funding.
This reflects the effects not only of the $200 million cut in child care
entitlement funding under the House budget but also of the long-term freeze
on child care funding reflected in the CBO baseline.
If child care funding provided on the non-entitlement side of the
budget also were cut, the number of child care slots lost would be even
Under the House
Budget Resolution, the TANF block grant
would be subject to $7.9 billion in cuts over the 2004 2013 period
if TANF received the same percentage cut as other programs in the same
budget function. When compared to the CBO baseline, the TANF cuts would be
deepest in 2010, when they would total $1.2 billion.
The TANF block grant is used to
support a wide array of benefits and services for low-income families.
While the TANF block grant supports basic cash assistance programs for poor
families with children, the drop in welfare caseloads in recent years has
led states increasingly to direct TANF funds to employment-related services
for low-income working families, such as child care programs and
transportation assistance. If each states TANF block grant allocation were
reduced, states would have to make difficult decisions about which
TANF-funded benefits and services to cut.
If states were to reduce the amount of TANF funds they
spend on welfare-to-work programs by $1.2 billion, about 340,000
welfare-to-work slots would be lost annually. This reduction would
happen even as states would be required to expand their
welfare-to-work programs significantly under the House TANF reauthorization
bill passed earlier this year.
The elimination of all TANF funding for
transportation assistance would achieve less than half of $1.2 billion in
It should be noted that the TANF reauthorization
bill that passed the House earlier this year did not include cuts in either
TANF or child care funding (and included some very modest increases). If
the Ways and Means Committee wanted to keep the TANF and child care funding
levels approved in the TANF bill the House has passed, the Committee would
need to find deeper cuts in other programs under its jurisdiction, such as
the Supplemental Security Income program for poor elderly individuals and
people with disabilities, the Earned Income Tax Credit, and the Social
Services Block Grant.
The House Budget Resolution calls
for Medicaid cuts totaling $92 billion over the 2004 2013 period.
These cuts would be deepest (as compared to the CBO baseline) in 2013, when
they would reach $25 billion.
A $25 billion cut in federal Medicaid
spending likely would result in total cuts in the program of $44
billion when the associated loss of state funding is considered. The
Medicaid program is a matched program in which the federal government and
states share the cost of providing health care to low-income individuals.
This means that when federal Medicaid costs are cut by $1, state funding
falls by an average of 75 cents. Low-income individuals and health care
providers, therefore, must absorb $1.75 in cuts for each $1 in federal
$25 billion is equal to fully one-half of the
projected federal cost of providing Medicaid to children in 2013.
Stated another way, if states were to achieve $25 billion in federal savings
entirely by reducing the number of children receiving Medicaid, states would
have to cut 13.6 million children off the program, or about half of
all children who are projected to receive Medicaid during 2013.
Alternatively, $25 billion is equivalent to about
one-quarter of the federal cost of providing long-term care services to
low-income elderly individuals and people with disabilities receiving
Thus, if states were to absorb all of these cuts by reducing the number of
individuals receiving long-term care services, nearly one in four low-income
seniors and individuals with disabilities receiving such services through
Medicaid would have to be denied nursing home care.
- Even if the federal Medicaid cuts were somehow structured
such that states either could not or did not reduce the Medicaid
expenditures financed with state funds despite the large reductions
in federal expenditures an unlikely scenario the cuts still would be
very large. If states did not reduce their spending in step with the
federal cuts, they still would need to cut off almost 8 million children
from Medicaid in order to achieve a $25-billion cut in federal Medicaid
spending by reducing childrens coverage. Similarly, if states chose to
achieve this cut solely by reducing the number of elderly individuals and
individuals with disabilities receiving long-term care services, they would
have to eliminate coverage for 13 percent of the individuals now receiving
these services even if the state did not reduce state spending.
Under the House
Budget Resolution, child nutrition programs
would be subject to $5.8 billion in cuts over the 2004 2013 period,
if these programs received the same percentage cut as the other programs in
the same budget function. The cuts in the child nutrition programs would be
deepest in FY 2010, when they would amount to $900 million.
If states were to achieve this $900 million cut by reducing
the number of children receiving free school lunches, they would have to
eliminate free school lunches for 2.4 million low-income school children.
Alternatively, if states were to achieve this $900 million
cut by reducing the number of children receiving reduced-price
lunches, they would have to eliminate nearly 400 million reduced-price
lunches, or 87 percent of the projected total.
$900 million is more than three times the cost of
the entire Summer Food Service Program. Even if the entire Summer Food
Service Program were eliminated, an additional $600 million in cuts would be
needed to achieve the $900 million goal.
If the cuts were achieved by reducing school lunch
subsidies for low-income children, the subsidy for every free or
reduced-price school lunch would need to be reduced by 31 cents. A cut
of this magnitude would result in federal free lunch subsidies falling well
below the cost that schools incur in providing these lunches in accordance
with federal nutrition guidelines. As a result, many schools would likely
find it difficult to provide meals that meet the nutrition standards.
Foster Care and Adoption Assistance
Under the House
Budget Resolution, mandatory child welfare
programs would be subject to $3.7 billion in cuts over the 2004
2013 period, if they received the same percentage cut as the other programs
in the same budget function. The cuts to these programs would be deepest in
FY 2010, when they would be $600 million.
If this $600 million cut were to be achieved by reducing
the number of abused and neglected children who receive foster care
assistance, benefits would have to be eliminated for 65,000 such children.
(These benefits consist of payments made to foster care families or
group care facilities to provide care for these children.)
Child Support Enforcement
Under the House Budget Resolution,
the child support enforcement program would be subject to $2.6 billion
in cuts over the 2004 2013 period, if it receives the same percentage
cut as the other programs in the same budget function. The cuts would be
deepest in 2010 when they would reach $400 million.
If the $400 million in cuts are achieved by reducing
funding for child support enforcement activities such as seeking support
orders, tracking down noncustodial parents who do not pay child support, and
enforcing wage withholding rules child support collections would be
expected to fall by $1.6 billion in 2010.
The reduction in child support collections would be still greater if states
reduced their spending on enforcement activities in step with federal cuts.
(Like Medicaid, the child support enforcement program is a "matched" program
which means a reduction in federal spending usually leads to a reduction in
state spending as well.) Recent research has found a strong correlation
between the amount spent on enforcement activities and the amount of child
support collected on behalf of children. Studies have shown that states
that invested more in child support enforcement were able to collect more
The $165 billion in cuts in low-income
entitlement programs in the House Budget Resolution would significantly
weaken a range of programs that provide basic assistance to working-poor
families, low-income children, the elderly poor, and people with
disabilities. Millions of these individuals and families could have
benefits and services upon which they rely reduced, or even eliminated. The
House Budget Resolution would cut programs that assist large numbers of
vulnerable families and individuals in order to offset a small share of the
cost of large tax cuts that would provide benefits heavily skewed to the
nation's wealthiest households.
The following people contributed to this report:
Leighton Ku, Zoë Neuberger, Dottie
David Super, and
Eileen Sweeney of the Center on
Budget and Policy Priorities; Jennifer
Mezey and Vicki Turetsky of the Center for Law and Social Policy; and
Allen of the Childrens Defense Fund.
This analysis assumes that no cuts will be made to the Unemployment
Insurance program because Chairman Nussle has stated repeatedly and in
writing that this program would not be cut.
This figure was calculated by dividing $2.9 billion by the CBO
projection of average SSI benefits in 2010.
This figure was computed by applying the percentage cut in the SSI
program in 2010 to the CBO projection of the average SSI benefit in
2010. This represents the amount by which the maximum SSI benefit would
have to be reduced. (If the maximum benefit is reduced by $10, for
example, then nearly all SSI recipients would receive a $10 reduction in
their benefits.) The projected maximum benefit level under current law
computed by increasing the current maximum benefit level by the
projected inflation rate between 2003 and 2010 and the maximum benefit
level after the cut is imposed were compared to the projected federal
poverty line in 2010.
States are required to spend a certain level of state funds for child
care in order to qualify for their full federal allotment of child care
funds. Because a portion of the federal child care funds require a
state match, if federal child care funding were reduced, the amount
states are required to spend would be reduced as well. A $200 million
cut in federal mandatory child care funding would result in a reduction
in required state spending on child care of $150 million. Even if
states did not reduce their spending by this $150 million, they would
have to eliminate 239,000 child care slots under the funding levels in
These figures were calculated based on the Congressional Budget Offices
projections of the average federal cost of Medicaid services for
children and CBOs projections of the number of children who will be
enrolled in Medicaid during 2013.
These figures were
calculated based on the Congressional Budget Offices projections of the
average federal cost of long-term care services for elderly and disabled
individuals participating in the Medicaid program.
This figure was computed by dividing the level of the cut required in
2010 by a projection of the average annual foster care payment level in
2010. The projection of the average annual foster care payment is based
on data on average annual foster care payments from the 2000
Green Book published by the Ways and Means Committee.
This amount assumes that states do not decrease their spending when
federal funds are cut and that states would reduce spending evenly
throughout the child support program and is based on states average
efficiency rating which shows that for each $1 spent on child support
enforcement activities, $4 in child support is collected.
states reduced their spending on child support enforcement by the same
percentage that federal spending was reduced, child support collections
would be expected to drop by about $2.4 billion in 2010.
See Garfinkel, et al., Child Support Enforcement: Incentives and
Center for Poverty Research,
2000; and Fishman, et al., Preliminary Assessment of the Association
between State Child Support Enforcement Performance and Financing
Structure, Lewin Group, 2000.