October 31, 2005
WHAT ARE THE EFFECTS OF CUTTING DOMESTIC
APPROPRIATIONS ANOTHER TWO PERCENT?
By Richard Kogan, Arloc Sherman, and Bradley Hardy
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• To reach its budget targets, the House of Representatives has already approved appropriations bills that cut domestic programs an average of 2.8 percent or $11 billion below the 2005 funding level, adjusted only for inflation.
• Chairman Nussle of the House Budget Committee is proposing that domestic appropriated programs (and defense and international programs as well) be cut an additional two percent.
• If the additional two-percent cut is applied across the board, many domestic programs would undergo substantial reductions from the combination of the cuts made in the appropriations bills the House has already passed and the additional across-the-board cut. This analysis portrays the cuts that would result in a number of programs, including Community Development Block Grants, Head Start, EPA clean water grants, Title 1 education for the disadvantaged, special education for people with disabilities, and Section 8 tenant-based housing vouchers.
To comply with budget targets set by Congress last April, the appropriation bills that the House of Representatives has passed this year have cut fiscal year 2006 funding for domestic programs by $11 billion, or 2.8 percent on average, below the 2005 level adjusted for inflation. Now, Representative Jim Nussle, Chairman of the House Budget Committee, is suggesting that annual appropriations for 2006 be cut an additional two percent.
It is not yet clear how the additional two-percent reduction would be implemented. Chairman Nussle had suggested reducing the Appropriations Committee’s funding limit by two percent as part of a revised Congressional Budget Resolution. Alternatively, the House of Representatives may consider a non-binding resolution calling on the Appropriations Committee to further reduce funding. Even without a formal revision to the congressional budget plan or a non-binding resolution, however, the House Appropriations Committee — under pressure from the Leadership and the Budget Committee — could reduce the existing 2006 appropriations bills by two percent. The House could, for example, insert a two percent across-the-board cut into one of the final appropriations bills that Congress passes before it adjourns. (Whether such a cut would actually be enacted is unclear, as some key Senators have expressed opposition to making further cuts in appropriated programs.)
Pressure to make these additional cuts stems from concern about the costs associated with relief and rebuilding efforts related to Hurricane Katrina, although those costs do not materially affect the nation’s long-term deficit problems. Pressure to offset Katrina’s costs has also led House committees to cut entitlement programs more deeply than the year’s budget resolution calls for. The Leadership wants the entitlement cuts that will be included in forthcoming “reconciliation” legislation to total $50 billion over five years, up from the $35 billion in cuts that the budget resolution requires.
The House Leadership does not intend to scale back either the existing tax cuts or the $70 billion in new tax cuts slated to be included in a separate reconciliation bill. As a result, the proposed cuts in appropriations and entitlements would not fully offset the cost of the new tax cuts, much less pay for any hurricane relief. Consequently, appropriated programs of benefit to families with low incomes, middle-class Americans, and state and local governments would be cut more deeply not to reduce the deficit, but to finance a portion of the cost of tax cuts that are expected primarily to benefit the well-off.
This analysis focuses on the effects on domestic appropriated programs if funding for such programs is cut an additional two percent across the board. In many cases, such cuts would have significant effects. An examination of the combined effect of the reductions already included in the appropriations bills the House has passed and a two percent across-the-board cut shows that funding for many domestic programs would be pushed well below the 2005 level adjusted for inflation (i.e., well below the level needed to maintain the current level of services). For instance, funding for —
- The Community Development Block Grant program would be reduced a total of $797 million, or 16.1 percent;
- Children and Families Services Programs (which includes Head Start) would be reduced by $656 million, or 7.2 percent. Head Start itself would be cut 3 percent, eliminating Head Start slots for about 27,000 low-income children; and
- EPA’s state revolving funds for clean water and drinking water would be reduced by $261 million, or 13.2 percent.
The report concludes with tables that show the state-by-state effects of most of these cuts. Each table provides notes on the data used to determine the state-by-state distribution of the funding reductions.
Dollar and Percent Cuts if House-passed Funding Levels are Reduced Another Two Percent,
(Relative to 2005 funding levels adjusted for inflation, i.e., the CBO baseline)
Proposed cut in millions of dollars
Education for the disadvantaged
School Improvement Programs
Vocational and Adult Education
Low Income Home Energy Assistance Programs (LIHEAP)
WIC (women, infants, and children) nutrition benefits
Children and families services programs
Child care & development block grant (CCDBG)
Section 8 housing vouchers
Ryan White HIV/AIDS Activities
Maternal and Child Health Block Grant
Community Development block grants (CDBG)
EPA Clean Water/Drinking Water State Revolving Funds
* In the case of WIC and Section 8 housing vouchers, we use an alternative to the CBO baseline, as explained in the notes attached to the tables on those cuts.
Read the Full Report with State-by-State Tables
 For a discussion about the impact of hurricane relief efforts on the long-term deficit and why focusing on the temporary increase in the short-term deficit rather than our longer run deficit problems is misplaced, see Robert Greenstein, “Getting Serious about Deficits? Calls to Offset Hurricane Spending Miss the Point; Balanced Set of First Steps Toward Fiscal Discipline Needed,” www.cbpp.org/10-6-05bud2.htm.