Say "No" to Further Budget Cuts in Domestic Programs - Stop the FY '06 Federal Budget Reconciliation Process

by Mary A. Cooper

October 14, 2005 — Congress is locked in furious debate over how to help victims of Hurricanes Katrina and Rita, and especially how to pay for such assistance. In addition to the usual partisan struggles between Democrats and Republicans, there are intra-party battles going on among moderate and conservative Republicans that threaten to delay the entire decision-making process. The moderates want to render assistance first and worry about how to pay for it later, while the conservatives feel priority should be given to reducing federal spending overall.

Adding to the confusion is a declaration by President Bush that spending for disaster relief will have to be offset by cuts in discretionary spending in order to avoid increasing the federal deficit, while at the same time he has promised to provide all the aid that is needed. (Discretionary spending is that part of the federal budget that is appropriated annually by Congress and is not mandatory or determined by a legislated formula, like Social Security).

Unfortunately, many of the programs that benefit low-income households are discretionary and, therefore, potentially subject to cuts in order to fund hurricane relief measures. Since most of the victims of the hurricanes are people who lived in low-income communities, the result is likely to be that - even if they were to receive considerable aid from the relief legislation - they are also likely to lose some part of the meager government aid for which they were eligible before the disaster.

The conservative House Republican Study Group, at a meeting October 6th, announced Operation Offset, a plan to cut two percent across the board from nearly every aspect of government, including homeland security and defense. Entitlement programs for low-income people, including Medicaid, would also be cut under the proposal, and implementation of the Medicare prescription drug program for senior citizens would be delayed for one year, a proposal adamantly rejected by President Bush.

Conservatives are increasingly distressed over the growing federal deficit, aggravated by the cost of hurricane relief, the expense of the war in Iraq, and the loss of federal revenues through the President's massive tax cut program. The leaders of 16 House and Senate committees were put under orders in the budget resolution, passed in the spring, to cut $35 billion over five years from entitlement programs. This is supposed to be accomplished through a Budget Reconciliation measure that is to be bundled together by the House and Senate budget committees by October 26. More than 750 national social welfare groups, including many in the religious community, have mounted a campaign to halt further budget and tax cuts. These groups are concerned that the spending cuts will hurt people living in or near poverty - as Medicaid and Food Stamp funding is threatened. Senate Democrats have called for postponement of the October 26th deadline for budget committees to report their package of reductions, saying Congress should focus instead on hurricane relief and energy prices and should not worsen the plight of storm victims by reducing the few benefits currently available to them.

On September 13th, leaders of five mainline Protestant denominations sent a letter to Members of Congress, noting their shared "concerns for the FY '06 federal budget and its impact on people living in poverty." As they comment: "It is clear that programs such as Medicaid and the Food Stamp Program that were slated for cuts by Congress will in fact have greater burdens placed on them as a result of Hurricane Katrina. These programs are not simple entitlements or 'government hand-outs,' they represent the deep and abiding commitment of a nation to care for the least among us. . . The FY '06 reconciliation bill that is working its way through the authorizing committees will send more people searching for food in cupboards that, quite frequently, are bare. With renewed urgency, we call on Congress to stop the FY '06 federal budget reconciliation process immediately." (See below.)

Meanwhile, the committees struggling to come up with their respective parts of the $35 billion in cuts are finding the task to be extremely difficult, especially in the face of the poverty and extreme need revealed by the hurricanes. Cuts that may be popular with or acceptable to the leaders of the Committees are being rejected by the broader membership and are proving not saleable in the House and Senate.

A few days after Katrina struck the Gulf Coast, Congress approved a $10.5 billion aid package, followed shortly by another $51.8 billion for disaster relief. Much of the money -- $23.2 billion - was directed towards housing grants and other aid for 1.1 million households, capped at $26,200 per family. Another $5.3 billion went to buy trailers, mobile homes, and other temporary housing for homeless survivors. Funds were also included for repairs to schools, roads and bridges, government buildings, and public utilities. Debris removal took another $3 billion and nearly $2 billion went for ice, water, food and tents for survivors.

In another action, Congress approved HR 3672, encouraging states to give short-term (four months or less) grants to eligible hurricane victims under Temporary Assistance to Needy Families. The grants are not subject to the time limits and work requirements normally a part of TANF. States will be reimbursed for TANF payments to evacuees from other states.

In the same bill, Congress extended TANF, which was due to expire on September 30, yet again, this time until December 31. The Senate subsequently approved a twelfth extension, through March 31. Authorization for TANF expired in August 2002, and the program has been kept alive through a series of short-term extensions since then.

The future of hurricane relief efforts is very much in question. The Louisiana congressional delegation has proposed its own plan for $250 billion in expenditures for its state alone, although some of the changes in law proposed would benefit storm victims in other states as well. Congressional leaders have predicted that the total cost will be below $200 billion for all affected states. Republicans want to pay for the disaster recovery effort by finding offsets in other programs while the Democrats generally want to delay or eliminate parts of President Bush's tax cut program to pay for hurricane relief. No funding plan appears to have the votes for passage at this point.

Another complicating factor is that, in the face of evidence and suspicion of mismanagement and waste in the relief effort, some Senators are calling for creation of a temporary executive position to oversee relief and rebuilding efforts (among them Gregg (R-NH) and Kennedy (D-MA), while the President threatens to veto any legislation that creates or funds such a post.

In the midst of all the wrangling, and after being back from its summer vacation for only a month, Congress has taken a 10-day break. When it returns to work on October 17, it will have to face more proposals and debates related to relief for the victims of Katrina and Rita. For example, Governors in the Gulf States are urging Congress to extend Medicaid to Katrina victims, many of whose jobs and places of employment were washed away by the storms. The Administration opposes this proposal on the grounds that it has already created a fund through the Department of Health and Human Services to pay doctors who treat uninsured victims. Some Senators have questioned that the Administration has the authority to set up such a fund without congressional approval. Sens. Grassley (R-IA) and Baucus (D-MT), sponsors of legislation (S 1716) to accomplish the Governors' goal, say they are only seeking what was given to households that had no insurance after the September 11, 2001, attack.

S 1716 would give five months of emergency Medicaid coverage to survivors of the storms wherever they have relocated, with the possibility of a five-month extension. The application procedures would be simplified and the need for extensive past medical records would be relaxed, because so many hospitals and medical offices lost their records in the floods.

The House financial Services Committee Chairman, Rep. Michael Oxley (R-OH) and Rep. Richard Baker (R-LA) have proposed, in HR 1461, creation of a National Housing Trust, which would give disaster areas and evacuees priority access to the fund. The fate of this measure is unclear in the House and the Senate has no such provision yet.

The House and Senate have approved and sent to conference committee HR 3768/S 1696, which would allow hurricane victims to borrow tax-free from their retirement funds for three years, provide an additional tax credit of $500 for each hurricane victim a taxpayer houses for 60 days or more, and increase tax breaks for charitable donations. The Senate bill also provides a small tax credit for displaced businesses that continue to pay workers, and both bills allow hurricane survivor taxpayers to use their 2004 incomes to calculate their eligibility for the Earned Income Tax Credit if using the 2004 figure would help them to stay eligible for the credit.

Letter to Congress

September 13, 2005

Dear Members of Congress:

As leaders of our respective denominations, we have long sought an end to the injustices inherent in poverty. We have never seen these injustices born out so vividly in our own country as in the aftermath of Hurricane Katrina. The devastation wrought by Katrina has exposed the anguished faces of the poor in the wealthiest nation on the planet. These faces, precious in the eyes of God, cause us to remember that racial disparities and poverty exist in almost every community in our nation. They also compel us to set before Congress once again our concerns for the FY '06 federal budget and its impact on people living in poverty. With renewed urgency, we call on Congress to stop the FY '06 federal budget reconciliation process immediately.

We believe our federal budget is a concrete expression of our shared moral values and priorities. Congress rightly and quickly responded in appropriating needed funds to ensure an adequate initial response to Hurricane Katrina. Our denominations have mobilized and are responding in prayer and financial support and direct service to those in need. Yet, just as disaster struck the Gulf Coast, the U.S. Census Bureau reported in very particular detail that poverty in the United States is growing. The annual report, Income, Poverty, and Health Insurance Coverage in the United States: 2004 showed that 37.0 million people lived in poverty in 2004, an increase of more than one million people since 2003.

In April, during consideration of the budget resolution we wrote to Congress that, "As we view the FY '06 Federal Budget through our lens of faith this budget, on balance, continues to ask our nation's working poor to pay the cost of a prosperity in which they may never share." It is clear that programs such as Medicaid and the Food Stamp Program that were slated for cuts by Congress will in fact have greater burdens placed on them as a result of Hurricane Katrina. These programs are not simply entitlements or "government hand-outs," they represent the deep and abiding commitment of a nation to care for the least among us.

Believe us when we tell you that even before Hurricane Katrina or the Census Bureau's report, neither we nor our friends of other faiths had the resources to turn back the rising tide of poverty in this country. The FY '06 reconciliation bill that is working its way through the authorizing committees will send more people searching for food in cupboards that, quite frequently, are bare.

We commit ourselves to working for economic policies infused with the spirit of the One who began his public ministry almost 2,000 years ago by proclaiming that God had anointed him "to bring good news to the poor."

The Most Reverend Frank T. Griswold
Presiding Bishop and Primate of the Episcopal Church, USA

The Right Reverend Mark Hanson
Presiding Bishop of the Evangelical Lutheran Church in America

The Reverend Dr. Clifton Kirkpatrick
Stated Clerk of the General Assembly, Presbyterian Church (U.S.A.)

The Reverend John H. Thomas
General Minister and President, United Church of Christ

Mr. James Winkler
General Secretary, General Board of Church and Society, United Methodist Church

General Assembly

The 207th General Assembly (1995) of the Presbyterian Church (U.S.A.) called on Congress "to defeat any proposals that base budget or deficit reductions primarily on the services provided to children, families, the needy, and the homeless" and urged strengthening of federal commitments to these groups. The Assembly also called on Congress "to insist on a government that follows ethical values of justice for the poor, welfare for children, hospitality to the stranger, and assistance to the disadvantaged." (Minutes, p. 718)