The FY 2006 Federal Budget:
Poor and Vulnerable are Slighted but College Financial Aid Also Shafted

As the budget reconciliation draws closer so do large spending cuts in assistance programs. Citing pressures to pay for rebuilding the Gulf region in the wake of the devastation from Hurricane's Katrina and Rita, House committees have been instructed to cut $50 billion, over the span of 5 years, from domestic programs within their jurisdiction. House Republicans are considering making deep cuts in "entitlement" programs (i.e., Medicaid, Food Stamps, and the Earned Income Tax Credit). Individuals of limited means (read: poor or otherwise vulnerable) disproportionately benefit from these programs.

The $50 billion figure is up from the original instruction, made in April of this year, to cut domestic (non-security) programs by $35 billion.1 The programs currently under scrutiny provide states with money that is used for benefits and services to poor and low-income families, the elderly and individuals with disabilities. The rationale for this additional $15 billion in cuts can be most simply explained as "robbing Peter to pay Paul," or taking from one group of individuals in need to pay for assistance for another group, also in need.

Aside from simple altruism, what's good for the goose is (at least in theory) good for the gander, meaning that all income levels should share in sacrifices made in the name of offsetting the costs for Gulf rebuilding efforts. Current proposals do not reflect this principle, as the majority of cuts under consideration are from programs that serve individuals and families with low incomes. To date, the House does not plan to roll back any of the tax credits passed in 2001 -- from which more affluent families disproportionately benefit -- and are considering $70 million in additional tax cuts.

And in case readers are tempted to dismiss the significance of these cuts, because they disproportionately impact the poor: The Education and Workforce Committee has been instructed to cut $12.7 (or more) in from programs that provide financial aid for students in college, graduate, and professional schools. As tuition rates have increased by approximately 35 percent in Maryland, financial aid is critical to many students (from families not considered poor) who desire to further their education in an effort to compete in today's job market.

Where will these savings come from? 2

Energy & Commerce Committee -- $14.7 billion with $10 billion from the Medicaid program and the remaining from other areas within the committee's jurisdiction

Ways & Means Committee -- $8-9 billion in cuts that could come from EITC, Supplemental Security Income, Temporary Assistance to Needy Families (TANF), child care funding, Child Support Enforcement and Foster care, adoption services and other supports

Agriculture Committee--$4-5 billion in cuts, likely to come from Food Stamps and other nutrition programs

Education and Workforce Committee-- $12.7 (or more) in from programs that provide financial aid for students in college, graduate, and professional schools

1 "Impact of Additional Entitlement Cuts: A State-by-State Analysis", Sharon Parrott and Arloc Sherman, Center on Budget & Policy Priorities, October 2005.

2 " Larger Reconciliation Cuts in the House Would Put Low Income Programs at Greater Risk", James Horney, Rober Greenstein, and Sharon Parrot, Center on Budget & Policy Priorities, October 2005.