NETWORK Response to House Budget Proposal

NETWORK Staff
March 23, 2015

The Fiscal Year 2016 GOP Budget, A Balanced Budget for a Stronger America, starts off with soft words that mask harsh policies. At NETWORK we have serious concerns about their claim to promote a better place to live and work, for all. They claim that they need to cut programs in order to grow the economy by giving further tax breaks to the wealthy. But, we have 30 years of experience that their trickle-down economics has only served to shift wealth to the top. Pope Francis says that trickle down theories “have never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacralized workings for the prevailing economic system. Meanwhile, the excluded are still waiting.” We here at NETWORK are still waiting to see a responsible blue print of government spending that prioritizes the needs of the majority of our people over additional preference for the wealthy. The actions they propose are hard to imagine creating a better place to live.

They assert that their plan will balance the budget in less than ten years, without any increased revenue. Their proposed $1.017 budget doesn’t balance in FY2016. However, in 2017 it comes closer as non-defense discretionary spending is cut twice as much as in 2016.

Some may read the GOP budget narrative and perceive it as being for the 100%, since they co-opt the language of compassion. However, on more careful reading and comparison between the narrative and funding tables it is clear that their budget would not bring about a better place FOR ALL to live, and certainly not to thrive. They speak about the need for all to have sufficient nutrition, yet they turn SNAP into a state run block grant, no longer an entitlement program available to all who meet criteria. This is one of many examples of the language not matching their actions.

NETWORK is seriously concerned about what is stated in neither the House nor the Senate budget statement – yet we hear from many sources that it will be heavily addressed in amendments to both. We believe that some Members will propose elimination of vital supports to taxpaying immigrant families, many of whom have citizen children. Programs such as the Child Tax Credit and the Earned Income Tax Credit help ensure families have the money to pay for basic needs.  Yet, word is out there that amendments would be proposed to eliminate Deferred Action for Childhood Arrivals (DACA), law since July 2012, and Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA), the president’s immigration actions in response to the failure of Congress to pass comprehensive reform. They would also deny family-friendly supports such as the Supplemental Nutrition Assistance Program (SNAP), non-emergency healthcare, housing assistance, tax credits and worker protections. Any one of these would be devastating to our nation – not just to the immigrants directly affected.

There are disturbing processes laid out in this budget plan. Although sequestration is maintained, true parity between defense and non-defense discretionary spending is lost, due to the slush fund called the OCO (Overseas Contingency Operations). Reconciliation instructions will be adopted, in which each committee is instructed to reduce the deficit, and to seek ways their committee can help to repeal the Affordable Care Act. A deficit-neutral reserve fund will be established to allow for further military spending or tax expenditures later in the year. A budget gimmick (Dynamic Scoring) allows spending and tax cuts to be justified by imagining some fiscal impact of the policy several years out – with no specific information on how that would be.

Several areas of the House GOP Budget proposal are particularly distressing:

Healthcare

The budget would do grave damage to the progress that has been made in providing affordable, accessible healthcare in the United States. Instructions in the budget to repeal the Affordable Care Act (ACA) are an attack on the 16.4 million Americans who have enrolled in insurance plans this year. Furthermore, the budget would privatize Medicare and convert Medicaid into block grants, decreasing significantly the funds available to states for participants in those programs. Finally, the budget repeals Medicaid expansion, moving the eligibility level back down to each state’s individually decided Medicaid level, which was on average 67% of the federal poverty level before the ACA was passed. All of these harmful changes are made with no significant plans to institute replacements for the coverage that will be lost.

Security

When asked what makes them feel secure, people generally speak about the ability to support themselves and their families. That means sufficient income to afford housing, adequate food, child care and healthcare. Rarely do they respond that nuclear weapons, drones and other military equipment make them feel safe. In fact, many speak to the discomfort and fear they have due to the huge numbers of weapons we hold.

Pentagon funding increases included for now and into the future make it evident that the House GOP budget prioritizes military defense over real human security. NETWORK hopes they follow through with their intent to increase support of veterans and their families.

However, the House budget accepts sequestration for limiting spending in the Pentagon base budget, which is raised to $523 billion, $1 billion over the FY2015 limit. Non-defense spending would be $493 billion, giving the Pentagon $30 billion more than programs to meet human needs. The Overseas Contingency Operations fund would provide an even greater boost of $90 billion to defense.

Non-Defense Discretionary

There is a discrepancy between recognition of needs and funding to meet those needs. Even in the commentary on their budget, this discrepancy is clear.

One statement lays out the need. In the same section, the funding is ridiculed as meant to increase government spending, rather than to meet the needs

“Right now, there are those in our nation who are truly struggling to make ends meet – who need our support…. Our charge is to address these challenges in a way that is compassionate and constructive – mindful of the fact that Washington does not hold the answer to every question.” A Balanced Budget for a Stronger America, p.26

This quote sounds supportive of the 100%. However, the quote below presents a negative view of spending on programs to meet the need.

“Financial aid and job training programs are measured by how much money goes in rather than how much achievement comes out. Similarly, food stamps, public housing assistance, and development grants are judged not on whether they achieve improved health and economic outcomes for the recipients or build a stronger community, but on the size of their budgets.” A Balanced Budget for a Stronger America, p. 26

Housing

The budget recognizes that the number of families heavily burdened by rent continues to grow.

HUD guidelines are that housing costs should be 30% of household income. Rather than providing additional housing that meets the guidelines, this budget eliminates thousands of housing vouchers and denies funding to the National Housing Trust Fund, designed to make available more units of housing affordable for low- and extremely-low income households. These are the families and individuals most likely to become homeless.

Jobs and Labor

Certainly, there is a need for more well-paying jobs within the United States. Republicans plan to increase jobs by providing more tax relief to the wealthy and to corporations.

We have seen this approach before as Congress reduced taxes for corporations in 2001 and 2002, promising that would create jobs – but the only new jobs were outside our borders, and many existing jobs were offshored. How will this be different?

Their plan to expand energy is another way in which they purport to produce jobs. Production and installation of green technologies would certainly do this – but the focus is on oil, gas and coal. And, finally, they claim that jobs will be created by reducing regulations – at what price to the environment and to human health?

Entitlements

One of the ways for the federal government to save money is to shift responsibilities and costs to the states.

Entitlements are defined by federal legislation, but many entitlement programs are jointly operated with states. The GOP budget would remove several entitlements. The mandatory elements of the Pell Grants would be eliminated. Both SNAP and Medicaid expansion, adopted by many states would be replaced by block grants called “State Flexibility Funds.” Each of these would provide less funding and place a greater burden on the states – while being framed as “respecting federalism.”

  • Temporary Assistance for Needy Families (TANF): Currently, there is a waiver allowing a single parent with a very young child to receive TANF benefits, even though not working. This waiver is removed in the budget.
  • Nutrition Assistance: The Supplemental Nutrition Assistance Program (SNAP) has been found to be efficient in meeting urgent needs, the most adaptable on short notice. It is counter-cyclical, with use growing as the economy is bad and shrinking as the economy improves. Just what it is intended to do. It has a negligible error rate. SNAP is attacked and cut significantly in this budget, accused of not being well run. A smaller amount of money, instead, would be provided for a State Flexibility Fund in 2021. State Flexibility Fund is another name for a block grant which would be vulnerable to discretionary cut, when it is implemented. Another cut to the SNAP program is the elimination of funding for efforts to increase SNAP enrollment.
  • Income and Disability Insurance: There is recognition that when people are unable to work, they need assistance. However, this budget mistakenly considers disabled persons as “double-dipping” when they are laid off from the minimal work they are able to do and receive unemployment benefits as well as the very meager disability insurance. Neither of these amounts alone allows a person to live in dignity. Yet, our vulnerable neighbors are denied this combined assistance.

Revenue

A faithful budget requires that our nation pay for and invest in programs that support the common good. Revenues raised through our tax system should pay for the public needs of society, and set us on a sustainable path to economic growth and stability. The Republican budget fails the test of fairness and justice by providing significant tax relief to wealthy corporations and individuals who are thriving in today’s economy by dropping rates and repealing the alternative minimum tax – while failing to provide tax relief to those who need it most: working class families and individuals who struggle to make ends meet.

Under this proposal, Republicans would allow the expiration of the Earned Income Tax Credit (EITC) and Child Tax Credit after 2017, meaning 13 million families (a total of 25 million children) would lose part or all of these tax credits in 2018. At the same time, billions of dollars each year in tax expenditures would be given to those in the top economic bracket.

These tax proposals are similar to what we have been hearing from the House majority for the last several years. It is likely that reconciliation will be used to make more specific tax expenditures. There is no attempt to make a case for any good that would come from their tax policies.

NETWORK continues to believe that the government needs to work from the base of “Reasonable taxes for responsible programs.” This implies that ALL individuals, corporations and other businesses should pay their fair share of what is needed for the nation to be a place where ALL can live and work, and to thrive. For this to happen, needs such as those addressed above must be adequately funded. Additionally, money must go into infrastructure repair and enhancement, and into protection of our fragile ecosystem.

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