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A Mean Budget

Tuesday, February 1, 2005

by Anuradha Mittal

On February 7, 2005, President Bush sent a nearly $2.6 trillion federal budget to the Congress. “It's budget that sets priorities,” Bush said after meeting his Cabinet. “It's a budget that reduces and eliminates redundancy. It's a budget that's a lean budget.”

The 2006 spending plan calls for draconian cuts (the biggest cuts in domestic expenditures since the Reagan years) that hurt the poor, subjecting many food stamp recipients, farmers, veterans, and small-business owners to Bush’s knife. And yet, it still worsens federal deficits by $42 billion over the next five years.

Built on the backs of the poor, the budget does not even cover the initial cost of Bush administration’s plans to overhaul Social Security which is estimated to cost $23 billion in 2009 and $754 billion over the next decade by the administration officials. At the same time, the budget attempts to make Bush’s tax cuts from his first term permanent, at a cost of $53 billion in the next five years and $1.1 trillion through 2015. It also calls for new tax cuts worth $23 billion in the next five years and $117 billion through 2015.

At best, the proposed budget can only be called a mean budget.

Here are some highlights of the proposed budget which reflect on administration’s priorities:

Pentagon: Pentagon is a big winner in the budget which gets an increase of 4.8 percent ($19.2 billion) in its budget for the 2006 fiscal year, increasing it to $419.3 billion. This represents a 41 percent increase over 2001 levels. This does not include any money to pay for operations in Iraq and Afghanistan in 2006, which have been averaging about $5 billion a month.

Education: Education accounts for 48 of the 150 government programs that are on Bush’s chopping block, including one that will provide $441 million in grants this year to states to promote drug-free schools and another that will spend $33 million on reducing alcohol abuse among students. About $2 billion would be cut from other high school program, including vocational education and other efforts including Upward Bound, Gear up, and Talent Search. Some educators fear it could mean the end of some of the best career training young people can get.

Community Development Block Grants: Bush’s budget proposes to end the Community Services Block Grants that were started more than 35 years ago as part of the fight against poverty.

If Congress approves the president's plan, funding for these programs, which help pay for community action agencies that provide housing, nutrition, education, and employment services to low-income people, will be folded into more than a dozen other grant programs and doled out by the Commerce Department. The block grant program alone was funded at $4.7 billion for 2005. The proposed budget — factoring in the consolidation with other programs — sets the number at $3.7 billion.

Food Stamps: The budget proposes stricter eligibility rules for food stamps. Under the proposal, welfare recipients who receive only child-care, education training and other services would no longer be automatically eligible for food stamps. This will have huge implications since cash assistance now accounts for less than half of all spending under the nation’s main welfare program, Temporary Assistance for Needy Families (TANF). So for example, families who have moved from welfare to work and are struggling with the high costs of child-care could lose nutrition assistance.

This comes at a time a report released in December 2004 by the U.S. Department of Agriculture (USDA), demonstrates that key supports like food stamps, TANF, child nutrition programs, still have an inadequate reach. The report, based on Census Bureau survey, demonstrates an increase in the number of hungry and food insecure Americans for the forth year! It shows that the total number of people living in food insecure households went up to 36.3 million in 2003. This number included 23 million adults (10.8% of all adults) and 13.3 million children (18.2% of all children). This number compared to 34.9 million in 2002, 33.6 million in 2001, 33.2 million in 2000, and 31 million in 1999.

Home Energy Assistance Programs: Programs such as the Low-Income Home Energy Assistance Program, that help the poor people pay their heating bills, will be cut by 8.4 percent, to $2 billion.

Environment: The Bush administration’s fiscal year 2006 budget proposal slashes total federal spending on the environment and natural resource conservation by more than 10 percent.

The greatest single cuts ($700 million) are to federal payments to a joint state-federal fund that underwrites projects to improve water quality and helps poor communities build waste-water treatment plans and other water projects.

It also proposes cuts to the discretionary budget of the Environmental Protection Agency (EPA) by 5.6 percent ($500 million cut); a $750 million cut to the Land and Water Conservation Fund and a $333 million decline in spending for National Oceanic and Atmospheric Administration (NOAA).

The NOAA budget reduction includes a 12 percent overall cut to NOAA Fisheries, a 53 percent cut to programs aimed at protecting marine mammals and sea turtles, a $29 million decrease in funding for the federal salmon plan, and eliminates an initiative to tackle marine debris. It also reduces the National Ocean Service budget by $255 million.

Agriculture: Under the proposed plan, the Department of Agriculture would slash direct payments to farmers by 5 percent and impose a $250,000 annual cap on total subsidy payments; the current limit is $360,000 a year.

According to the National Family Farmers Coalition (NFFC), "Bush's budget benefits Corporate America - not Rural America." In a statement released on February 9, NFFC states that the proposed Bush budget cuts for FY 2006 will hurt family farmers, give little relief to taxpayers and continue delivering low priced farm commodities to the corporate livestock industry. Because the 2002 farm bill doesn't do what a farm bill is supposed to do - support market prices and avoid wasteful overproduction-farmers have become dependent on government subsidy payments that are getting the ax in this 2006 budget.

The NFFC also states that the proposal to limit government payments to $250,000 per year may affect some large cotton and rice producers, but the cap will have little effect on producers of other commodities. If cotton and rice producers shift production to corn, soybeans, or wheat, this will increase overproduction of those crops and further depress the farm price.

Bush's budget also dismantles important rural development programs, slashing their funding and moving the programs to the Department of Commerce; adding confusion to both the program delivery and the mission of these programs. To learn more about NFFC's response to Bush's budget, click here.

Overall, the budget offers no help to family farmers who are up against monster subsidies to the agribusiness, nor does it provide any relief to poor farmers in the Third World countries whose livelihoods are being destroyed by the dumping of subsidized, artificially cheap American exports.

Medicaid: In Medicaid, Bush is seeking changes that would force many hospitals, which depend on Medicaid for more than 40 percent of their revenue, to reduce or eliminate services.

Bush’s proposal also cuts $100 million from a $301 million program that trains doctors at children’s hospitals and would cut the budget for training other health professionals by 64 percent, to $160.5 million. Spending is also cut for programs that deal with epidemics, chronic diseases, and obesity, preventive health services, the training of nurses, dentists, and other health professionals.

Veterans: More than one million of the five million veterans who are expected to seek health care from the Department of Veteran Affairs in 2006 will face a new $250 enrollment fee and prescription co-payments that will increase from $7 to $15 under Bush’s budget. In addition, the department will move to reduce the number of patients in the Veteran Affairs nursing homes, seeking to care for more veterans in their homes.

Millennium Challenge: Though the Millennium Challenge Account has not yet spent a penny, President Bush did make a commitment in his first term to spend $5 billion a year in helping the poorest nations of the world out of poverty. His latest budget proposal cuts the account by $ 2 billion, calling for $3 billion only.

It is not surprising that the New York Times editorial (NYT, February 8, 2005) calls Bush's proposed budget "a monument to misplaced political capital" and "a picture of reduced revenue and swollen pockets of hidden spending."

(C) 2005 By The Oakland Institute. All Rights Reserved. Please Obtain Permission to Copy.