The President's Budget

FY2008 President’s Budget – A Familiar Story

Overview

On February 5, President Bush released his proposal for the Fiscal Year 2008 budget, which outlines the Administration’s priorities for the coming year. This year’s proposal is very similar to past years’ and recycles a number of policy initiatives and program cuts that have met with strong opposition from the human needs advocacy community. Couched in language of fiscal discipline, the President’s budget, only achieves its stated deficit reduction on paper and through a continuation of the unbalanced tax and spending policies that are the source of current fiscal problems. Among the biggest problems are the President’s continuing push to make all of his tax cuts permanent ($3.5 trillion cost over the next 10 years) and the ever-expanding military budget (now accounting for over 50% of the discretionary budget even without including the costs of military operations in Iraq and Afghanistan), which continue to crowd out much needed investments in health care, housing, education, and community development.

Overall, while the President’s budget claims a small increase (1%) in “non-security” discretionary funding, it actually cuts domestic discretionary programs by $13 billion (or 3.2%) below the FY2007 levels recently approved by Congress. Over the next five years the cuts would total $114 billion (below what is needed to maintain current services), yet over the same period tax cuts and ever-increasing military spending would more than negate these “savings”. Once again the most vulnerable in our nation are being asked to shoulder the burden of past fiscal irresponsibility, while little sacrifice is being asked of those who have most benefited from the opportunities our nation offers. While there are a few bright spots, particularly in funding for international health and development, the President’s proposal continues to reflect the wrong priorities and creates a challenging environment for anti-poverty advocates and a need for prophetic witness from people of faith.

The vision of community, reconciliation, abundance, and opportunity held up by the prophets the Hebrew Scriptures and embodied by Jesus’ ministry may seem too utopian at times, especially given political realities. However, it is a vision that speaks of what is possible if both individually and as a nation we start making better choices. The following takes a closer look at some of the choices in the President’s budget and what is needed to begin reinvesting in the common good and providing real security for our nation.

A Closer Look

Health Care and Mental Health

Some of the biggest cuts in the President’s budget come in health care, although the President highlighted a new proposal to try to expand health coverage in his State of the Union address back in January. Medicaid and Medicare are targeted for significant reductions, the State Children’s Health Insurance Program (SCHIP) is underfunded, and mental health programs are also slated for cuts. Some additional funding is provided to support Community Health Centers (though this is cut in later years) and new tax breaks are proposed to help uninsured individuals purchase insurance on the private market, but these do little to help provide coverage to the 47 million uninsured Americans. Here are some of the key proposals:

Medicaid: The President’s budget recommends a total of $25.7 billion in cuts to Medicaid over the next fives years to be achieved through legislative changes and administrative actions that include: reducing payments for targeted case management, reducing state administrative payments, and changes to how Medicaid pays for prescription drugs. The “savings” appear to come mostly from increasing costs to states, which in turn result in reduced benefits or eligibility. These cuts come on top of those already made by Congress in FY2006.
SCHIP: The State Children’s Health Insurance Program provides health coverage to 6 million kids and is scheduled for reauthorization this year. Advocates have estimated that the program needs at least $15 billion in new funding over the next 5 years in order to continue serving all currently enrolled children and a total of $50-60 billion in new funding to reach all kids who are currently eligible but not enrolled. The President’s budget proposes an increase of only $5 billion over 5 years, the result of which will be that hundreds of thousands of children will lose health coverage.
Mental Health Programs: Overall the President’s budget cuts funding for the Substance Abuse and Mental Health Services Administration (SAMHSA) by $159 million below the FY2007 level. Within this amount, the largest cuts are to Substance Abuse Treatment Programs of Regional and National Significance ($47 million), the Mental Health Programs of Regional and National Significance ($76 million), and Substance Abuse Prevention Grants ($37 million). In addition, most other mental health and substance abuse programs are frozen at levels insufficient to maintain current services.

Child Welfare, Juvenile Justice, and Violence Prevention

Block grants are the theme that dominates these areas of funding.

Child Welfare: This year’s budget again contains a proposal to restructure the Title IV-E foster care program into a fixed grant, but Congress has shown little interest in pursuing this plan. Despite promises to fully fund the Promoting Safe and Stable Families discretionary budget ($200 million), the President’s budget keeps funding at the current level of $89 million. Child Abuse and Prevention Treatment Act (CAPTA) grants are kept at FY2007 except for a small increase in the discretionary grant program to encourage home visitation programs. Most other programs are kept at FY2007 levels.
Juvenile Justice: The President’s budget eliminates all current juvenile justice programs and proposes the creation of a new Child Safety and Juvenile Justice Program. Under the new block grant program, states would no longer automatically receive funding based on the number of youth who live there, but would have to compete for grants. With overall funding cut by $85 million, many states would lose funding. According to the Child Welfare League of America, funding for juvenile justice has declined by 40% over the past 5 years.
Violence Prevention: As mentioned above, the President’s budget proposes consolidating over 20 VAWA programs into one new block grant which would eliminate the Act’s critical targeting of resources to the various partners that are involved in violence prevention and victim services. Police, prosecutors, judges, tribal government, and victim services organizations would be forced to compete against one another for limited funding and could leave some services without funding at all, especially the new programs created in VAWA 2005 that have yet to receive any funding. Overall VAWA funding is frozen at the FY2007 level.

Other Human Services

Housing: The President’s budget calls for $16 billion in funding for the Section 8 rental assistance program—only $80 million more than the FY2007 level. The Center on Budget and Policy Priorities estimates that this funding level will cause the loss of 40-80,000 vouchers in FY08 in addition to the vouchers that have been lost in previous years. In addition, the budget would make deep cuts to the Community Development Block Grant, Public Housing, and housing for the elderly and people with disabilities.
Social Services Block Grant: The President’s budget would cut SSBG funding by half a trillion dollars to $1.2 billion. This flexible block grant is used to provide a wide range of social services including child care, child welfare and protective services, education and training, and residential treatment. SSBG funding represents 12% of all federal funding that states use to provide a wide range of child welfare services. SSBG has been frozen at $1.7 billion for the past several years.
Education and Training: The President’s budget proposes numerous cuts to education and job training programs, including the elimination of 44 programs within the Department of Education. The budget against slashes the Safe and Drug Free Schools Program ($266 million cut), cuts Head Start ($100 million and the likely loss of 30,000 children served), continues the freeze on child care funding (150,000 slots have already been lost and another 300,000 will be lost by 2012), and reduces IDEA funding to the lowest level in 5 years. As is previous years, the President’s budget also proposes to merge several training programs (WIA Adult, WIA Dislocated Worker state grants, WIA Youth, and Employment Service) into a new block grant to provide “Career Advancement Accounts” to workers seeking training. As part of the consolidation, the programs would be cut by over $500 million. In addition, President’s budget would severely cut ($700 million) the Perkins Vocational and Technical Education program.

International Programs

In one of the few bright spots of the President’s budget, both the Millennium Challenge Account (MCA) and Global AIDS funding received significant increases in FY2008. However, other core humanitarian and development assistance programs again are slated for freezes or cuts and continue to be dwarfed by military assistance and expenditures.

MCA: Announced by the President in 2002 and enacted in 2004, the Millennium Challenge Account has been one of the U.S. responses to the call for increased investment in support of the Millennium Development Goals. The initial funding promise was for $5 billion per year by FY2006, but both the President and Congress have failed to meet this goal. However, this year the President proposes to increase funding for the MCA by $1.25 billion to $3 billion.
Global HIV/AIDS and Health Funding: The President’s budget requests $5.7 billion in funding for HIV/AIDS, malaria, and tuberculosis prevention and treatment. However, only $300 million of this is provided for the Global Fund to Fight AIDS, Tuberculosis and Malaria—over $400 million below the amount provided by Congress in FY2007 and approximately $1.1b less than the calculated U.S. share of the Global Fund’s needs for the year—and $4.1 billion is designated for just 15 targeted countries.
Other Assistance Programs: Child Survival, Disaster and Famine Assistance, and Migration and Refugee Assistance are all cut in the President’s budget. Development Assistance is also cut significantly, but it appears these funds may be shifted to another area of the budget so that the impact of the cuts in not yet known. One other positive development is an increase in funding for humanitarian assistance and peacekeeping forces in Darfur, Sudan.

Human Impact

These are what the numbers look like, but we know the impact will be felt by individuals, families, and communities in different ways. This is where we need YOUR help—to demonstrate the real life importance of these services and investments to Congress. We need stories, local data, and reports from state and local agencies about what these cuts mean in HUMAN terms to help build our case with members of Congress that different budget choices are needed. Here are some specific things we are looking for:

What difference has a particular program made to a client or someone you know in the community?
What are some success stories you have seen that have come as a result of specific funding?
What changes have state and local governments made because of funding cuts?
Has your agency been forced to reduce services because of funding cutbacks? Have other agencies in your community?
What could you accomplish with additional resources? How much would it cost to serve additional clients or build a new program?

If you can answer any of these questions or have additional information on the impact of budget cuts that you would like to share, please submit them through our story/comment page or e-mail them to Alison Prevost.

An Alternative Vision

As mentioned above and in the direction statement of the 28th General Chapter of the Sisters of the Good Shepherd, the National Advocacy Center believes that another reality is possible if our national decisions are infused with the right values and priorities. The Catholic Bishops’ pastoral letter Economic Justice for All puts it this way:

Biblical justice is the goal we strive for. ... These norms state the minimum levels of mutual care and respect that all persons owe to each other in an imperfect world. Catholic social teaching, like much philosophical reflection, distinguishes three dimensions of basic justice: commutative justice, distributive justice, and social justice. Commutative justice calls for fundamental fairness in all agreements and exchanges between individuals or private social groups ... Distributive justice requires that the allocation of income, wealth, and power in society be evaluated in light of its effects on persons whose basic material needs are unmet. ... Social justice implies that persons have an obligation to be active and productive participants in the life of society and that society has a duty to enable them to participate in this way.
Economic Justice for All, #68-71

While the President’s budget is discouraging, the good news is that the new Congress has already shown willingness to correct some of the wrongheaded policies and budget decisions of the past several years. In completing the final FY2007 appropriations legislation, Congress listened to advocates and added funding to prevent harmful cuts to a number of human needs programs, particularly housing, Head Start, and education. Many offices have indicated openness to new investments and a desire to restore not just fiscal balance, but moral balance to the budget. However, the bleak fiscal situation creates a very challenging environment for Congress and will require changes to tax policies and a reevaluation of military expenditures that will be politically difficult.

This is where Good Shepherd voices are critical because pressure from constituents does bring change—just look at the most recent election. We won’t be able to accomplish everything in this year alone, but there is a lot of potential for progress. With the State Children’s Health Insurance Program up for reauthorization this year, there is an opportunity to provide health coverage for ALL children. New leadership in several congressional committees has brought new discussions about poverty and revived discussions of new investments in affordable housing. It comes down to choices…simply repealing the tax cuts for those making over $1 million a year would yield over three quarters of a TRILLION dollars in additional revenue over the next ten years that could be used for critical investments. The question of military spending remains particularly challenging, given fears of terrorism and current military operations, but some analysts say that at least $60 billion a year can be shaved from the Pentagon’s budget without harming military readiness and we are hopeful that there is a growing political will to end U.S. military involvement in Iraq.

The National Advocacy Center believes this is a year of opportunity and a real chance to reshape the debate in favor of a more just and balanced budget that truly provides for the general welfare or all. Please join us in speaking out and holding our elected officials accountable to the common good!

Take Action Now!

For More Information on the President’s Budget

Visit our Additional Budget Analyses page for a comprehensive listing of budget process background resources, budget analyses, faith responses, and detailed reports of how cuts will affect health, housing, education/job training, and other services.