Revised January 22, 2003

Cutting $10 Billion in Appropriations for Poverty and Other Programs While Promoting a $670 Billion Tax Cut:
Does This Represent Fiscal Discipline and Balanced Policy?
by Robert Greenstein and Richard Kogan

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The omnibus appropriations bill for fiscal year 2003 that the Senate is now considering contains a series of cuts that would adversely affect workers hard hit by the economic downturn, significant numbers of low-income elderly and disabled individuals and low-income children, and state governments that are in the midst of their most serious fiscal crises in 50 years.  The new legislation cuts approximately $10 billion from the funding levels the Senate Appropriations Committee approved, on a unanimous and bipartisan basis, last summer and fall.

This cut of $10 billion has been made at the White House’s insistence.  Press reports make clear that the Senate Appropriations Committee was given no choice but to adhere to the total funding level set by the White House and that the leadership of the Committee appealed unsuccessfully to the President on behalf of the levels it had agreed to on a bipartisan basis last summer and fall.

The White House has contended that these cuts are needed to maintain fiscal discipline and address budget deficits.  In light of the White House’s proposed $674 billion “growth package,” the Administration’s rationale is difficult to discern.

Values and Priorities

At bottom, the issue is one of values and priorities.  Should funds for job training for the unemployed, child care and education for disadvantaged children, and maintenance and repairs to public housing be cut back to free up resources for more tax cuts disproportionately geared to the nation’s most affluent members?  The Administration’s “growth package” would reduce the 2003 tax liability of the top one percent of households by $28 billion.  Of that amount, $18 billion would go to households that make more than $1 million a year — the top 0.2 percent of households — who would secure average tax cuts of $90,000 apiece in 2003.  (These estimates are based on calculations by the Brookings-Urban Institute Tax Policy Center.)

Moreover, the $10 billion in appropriations reductions includes a number of troubling cuts.  These reductions include both specific cuts in programs and an additional 2.9 percent across-the-board cut in all programs.  (The savings from the across-the-board-cuts would be plowed back into drought relief, election reform, firefighting, Medicare provider payments, and a new block grant to states for education.)  The examples below show some of the program reductions in the omnibus appropriations bill as it stands on January 23 (including the effects of the across-the-board cuts).  As the bill now stands, outside of education, programs serving low- and moderate-income families and individuals would be cut 4.2 percent — or $2.0 billion — below the 2002 level, adjusted for inflation.

Low-income Education Programs

In the omnibus appropriations bill, education programs serving low- and moderate-income students, such as Title 1 grants and Pell Grants, have been cut $1.7 billion below the levels the Appropriations Committee approved last summer.  Funding for these programs now stands only $0.4 billion above the CBO baseline, and the funding level for Title 1 falls far short of the amount needed to reach the goals set in the “No Child Left Behind” law.  It should be noted, however, that in addition to specific funding for existing education programs, the Senate bill includes a new education block grant of $5 billion that states and school districts could use for any activity authorized by the Elementary and Secondary Education Act, the Higher Education Act, or the Individuals with Disabilities in Education Act.   (This new block grant was added as a floor amendment and is one reason the across-the-board cut to specific funding levels has reached 2.9 percent.)  Because state and local authorities would have wide leeway in choosing how to use the funding this new block grant would provide, it is impossible to say what portion of it might be devoted to the needs of low-income students.

End Notes:

[1]   The figures in this paragraph cover the combined funding levels for the public housing operating fund and the public housing capital fund.

[2]   These figures exclude the housing certificate fund, which finances Section 8 housing vouchers.  The subcommittee with jurisdiction over that program devised a new way to finance the program that will allow all authorized vouchers to be renewed while providing a lower amount of funding than would have been needed under the previous financing approach.  As a consequence, the apparent funding reduction in this program relative to the baseline or the previous Senate bill does not constitute a reduction in benefits.