Revised December 5, 2005

Changes Made Before the Vote Were Very Small
by Robert Greenstein and Sharon Parrott

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In both the morning and the evening of November 17, House leaders made modifications to the House budget reconciliation bill.  Some of these changes were intended to garner support from members of Congress concerned that millions of low-income families would be harshly affected by the bill and forced to shoulder a large share of the bill’s cuts.

CBO analyses show, however, that the modifications are very minor and do not soften the bill’s effects on vulnerable low-income families very much.  These changes reduce the total level of cuts that most directly affect low-income families and individuals by only about two percent.  The other 98 percent of the low-income cuts remain.[1]

Finally, it remains the case that these cuts would not be used to reduce the deficit or to offset the costs of hurricane relief.  These cuts would be used instead to partially offset the cost of the tax-cut reconciliation bill that the House plans to consider as early as tomorrow.  The tax-cut bill would reduce revenues by $56 billion over five years, more than offsetting the total savings in the House budget-cut bill. 

While the budget cuts would heavily affect many low-income families, the centerpiece of the tax-cut bill these budget cuts would help finance — the extension of the capital gains and dividend tax cuts — would overwhelmingly benefit the nation’s most affluent individuals.  The Urban Institute-Brookings Institution Tax Policy Center reports that 53 percent — or more than half — of the tax-cut benefits from the capital gains and dividend measures go to the 0.2 percent of households that make more than $1 million a year.

End Notes:

[1] The cuts included here are those made in food stamps, SSI, foster care, child support enforcement, and the cost-sharing and benefit reductions in Medicaid.  Calculations are based on CBO data.

[2] Under the new option, states and school districts could maintain free school meals for children whom they could determine were receiving certain TANF-funded benefits.  This new option is similar to an option that was in federal law for a number of years for schools to provide free school meals to all children who receive food stamps.  Many states and school districts did not implement this option, for administrative reasons, until federal law was changed to mandate it.

[3] This is a CBPP estimate based on CBO data.  No specific CBO estimate is available.