Federal tax and budget cuts seen hurting poor, vulnerable

WASHINGTON (CNS) — The newly approved 2006 federal budget and the budget proposals for coming years will cut programs for the poor and vulnerable even as tax cuts and higher defense spending increase federal deficits, Catholic social ministry leaders were told Feb. 14 at a national conference in Washington.

Ellen Nissenbaum, legislative director of the Center on Budget and Policy Priorities, said the Bush administration’s fiscal year 2007 budget proposal calls for deep cuts in domestic discretionary programs, some cuts in entitlement programs and tax cuts that will increase the deficit.

"This fails the test of fairness, and it certainly fails the test of fiscal responsibility," she said.

Deborah Weinstein, executive director of the Coalition on Human Needs, said the 2006 budget reconciliation bill, just signed into law the previous week, institutes changes in the Temporary Assistance for Needy Families, or TANF, program that will lead to less Medicaid funding and make it much harder for states to meet requirements for federal funding.

Nissenbaum said that, out of the legislation enacted since 2001 that has contributed to the federal deficit, in the 2005 deficit 48 percent was due to the administration’s tax cuts; 36 percent to defense, homeland security and international programs; 8 percent to entitlements; and 8 percent to discretionary domestic spending, not counting homeland security.

The Catholic social ministry leaders attending the workshop were being briefed on the human impact of federal budget decisions in preparation for visits to their senators and representatives on Capitol Hill later that day.

The legislative briefings and Hill visits are a regular feature of the annual Catholic Social Ministry Gathering, which this year attracted about 560 speakers and participants. The gathering was co-sponsored by five agencies of the U.S. Conference of Catholic Bishops and 12 national Catholic organizations engaged in peace and social justice concerns.

Weinstein said the Medicaid cuts in the TANF program will allow states to charge more for medical care and/or reduce benefits. Nearly 28 million children could be affected by the changes, she said.

She said reduced funding for child support enforcement could lead to $8.4 billion in uncollected support that is owed to children over the next decade.

Child welfare cuts will make it harder for relatives to receive assistance for providing foster care for their kin, she said, and cuts in student loans will make students pay billions of dollars more for their education.

One of the more significant changes in TANF is changing the benchmark year for states’ caseload reduction credits from 1995 to 2005, making it much more difficult for many states to reach work participation requirements for funding, she said. Under the work participation requirement, states can qualify for block grants and other funding if 50 percent of all families have a job or participate in vocational education, job training or similar activities for a certain number of hours a week; for two-parent families, 90 percent work participation is required.

Weinstein said many states that currently meet the requirements because of credits for caseload reductions since 1995 will have to increase their number of work-participating families significantly in order to meet the new benchmark of reductions since 2005.

According to one chart Nissenbaum showed the group, in 2006 Americans in the lowest 20 percent of household income will receive an average of $23 each as a result of the Bush administration tax cuts; those in the middle 20 percent will receive an average tax break of $748; those in the top 20 percent will average $5,406. The 2006 tax break for those in the top 1 percent of earned income will average $39,020, and for those whose annual income exceeds $1 million, the average tax break will be $111,549, according to the chart, based on data from the Tax Policy Center.