The Connecticut General Assembly is in session, and the budget hearings have begun. With the state facing a deficit north of $570 million in the coming fiscal year, legislators are again scrambling to find ways to balance the budget.
There seems to be very little appetite so far for any kind of tax increases, so Governor Malloy and legislators are talking about cuts - and these cuts are being discussed, right now, at multiple Appropriations Committee hearings at the Capitol. You can find the calendar here; today the committee will hear about higher education. Tomorrow at 4 pm they will host the hearing for human services which may be of most interest to you.
There are two things to bear in mind about the budget revisions proposed by Governor Malloy, one about process, one about where the cuts will fall. Both are important, and deserve some attention.
A. WHERE ARE THE CUTS?
The cuts for fiscal year 2017 add up to $570 million. The departments that are facing the worst cuts are the Department of Social Services ($61 million), Department of Developmental Services ($55 million) and from addiction and mental health services ($71 million).
This by itself would be worrisome, but it goes beyond that. According to the CT Community Nonprofit Alliance´s analysis, 72% of the cuts ($408 million) come from non-profit providers. Consequently, many core services offered by these providers will again face an uphill battle meeting the needs of low-income families in the state with diminishing resources.
The slow economic recovery has left many families behind. The budget is asking them again to bear the brunt of the state fiscal woes.
B. HOW ARE THE CUTS BEING INTRODUCED?
Governor Malloy has decided to consolidate most line items in the budget under a generic "agency operations" heading. After that, his proposal states that spending will be cut 5.75%, but without specifying exactly from where.
This is a problem. Instead of the traditional budget breakdown of proposed reductions with specific explanations of what line items are facing cuts, this proposal just offers an agency-wide spending level, and gives the authority to each agency head to decide where to cut. The result is a budget that imposes harsh spending cuts but is lacking in transparency, with no information on what programs will be eliminated.
This is not acceptable. Transparency is an essential for accountability. The Governor´s budget proposal shifts the responsibility and decision making for crucial spending decisions from an open, public process at the General Assembly towards one with no public participation, no open hearings and limited accountability. The only way to make those decisions and introduce real, needed changes to the state budget is through an open, accountable and transparent budget process, not by delegating authority to the executive branch.
WHAT IS NEXT? HOW CAN I GET INVOLVED?
Right now we encourage you to reach out to your legislators, even more so ifthey are on Appropriations. If you are able, we strongly encourage you to submit testimony to the committee, specially if you are involved in a program that is facing cuts. The message is simple:
Feel free to give us a call if you have questions or need a hand drafting testimony, setting up a meeting with a legislator or preparing talking points. We will be happy to help.
Today the 2009 Recovery Act's temporary boost in SNAP (food stamp) benefits expires. This will translate into a benefit cut for each of the 424,000 SNAP recipients in Connecticut.
The change will cut SNAP benefits an average of $36 for a household of four. A household of three, such a mother with two children, will lose $29, or a total of $319 a year. The cut is equivalent to 16 meals a month for a family of three, based on the cost of the US Department of Agriculture "Thrifty Food Plan". 87% of SNAP recipients live in households with children, seniors or people with disabilities. These cuts directly affect the most vulnerable.
The cuts have a direct economic impact. According to a Center for Budget and Policy Priorities study, Connecticut will receive $44 million less a year in public benefits. The cuts will decrease the disposable income of many families, creating a ripple effect on local retailers and businesses. The Congressional Budget Office has long ranked SNAP as one of the most effective fiscal stimulus programs: the money goes to families in need that spent the money right away. Pulling these money out of the economy will also hurt the economy as a whole, not just its recipients.
Congress is working on the long delayed farm bill, with House and Senate delegations trying to reach an agreement in a conference committee. The House proposal includes more than $40 billion in cuts; the Senate $4 Billion. As part of our work with the New England Consortium CAHS is advocating to the New England delegation to stop these cuts.
SNAP is a crucial part of this country's safety net. We can not afford any more cuts.
Jonathan Cohn, at the New Republic, has an epic, 30,000 character article at The New Republic on the state of early care and education in America. His conclusion: we, as a county, are doing a terrible job at it.
American day care performs abysmally. A 2007 survey by the National Institute of Child Health Development deemed the majority of operations to be “fair” or “poor”—only 10 percent provided high-quality care. Experts recommend a ratio of one caregiver for every three infants between six and 18 months, but just one-third of children are in settings that meet that standard. Depending on the state, some providers may need only minimal or no training in safety, health, or child development. And because child care is so poorly paid, it doesn’t attract the highly skilled. In 2011, the median annual salary for a child care worker was $19,430, less than a parking lot attendant or a janitor. Marcy Whitebook, the director of the Center for the Study of Child Care Employment at the University of California–Berkeley, told me, “We’ve got decades of research, and it suggests most child care and early childhood education in this country is mediocre at best.”
At the same time, day care is a bruising financial burden for many families—more expensive than rent in 22 states. In the priciest, Massachusetts, it costs an average family $15,000 a year to place an infant full-time in a licensed center. In California, the cost is equivalent to 40 percent of the median income for a single mother.
This is specially worrisome because, as Cohn has pointed out in another must read article, early care and education is by far the most powerful, effective tool we have to help low income kids succeed.
CAHS has long recognized how important these issues are, and we have advocated for better early care and education for years we will continue to do so as member of the Early Childhood Alliance.
Our work this year is specially relevant, as budget deficits endanger Connecticut´s investment in helping low income families have access to quality child care. Care 4 Kids, the state´s child care subsidies program, has been targeted for cuts. Currently, when a family’s income raised above 50% of State Median Income (SMI), their childcare subsidy is adjusted, and they can continue receiving Care4kids until they reach 75% of SMI. The Governor’ has proposed to close the program to families between 50 and 75% SMI, creating a sudden benefit cliff for these households. Due to the very high cost of child care in the state, these cuts can potentially drive working families to refuse pay raises or longer hours to avoid going over the income limit, as it will entail a net loss of take home income due to the sudden increase in child care payments. The governor´s plan, rather than saving money, puts these working families and their kids in a no-win situation.
One thing that political scientists have known for awhile is that voters say that they prefer spending cuts to tax hikes on the abstract, but they are against cutting any specific social program when given a choice.
The Pew research center published a poll last month with a list of Federal spending programs, from entitlements to foreign aid, asking if funding should be reduced, sustained or increase in each of them. Here are the results:
Not a single Federal program (not even foreign aid) has a majority of voters asking for cuts over increase or maintain funding. Not one. In most cases a plurality of voters want to keep spending at the same level as it is today, closely trailed by the group that wants to spend more. Even in the three programs were budget-cutting did not come last they could only muster 48, 34 and 32% support.
These numbers explain, incidentally, why the policy debates on the budget are so frustrating. Fiscal conservatives are quick to demand budget cuts, but they are always very reluctant to name what policies and programs they want to pull money from. Liberals, on the other hand, tend to avoid saying that they want higher revenue and more spending on the abstract, but will offer a shopping list of stuff it is worth funding in a heart beat. In the last election we had the Republican running on a platform of cutting spending while blasting the President for cutting Medicare; you do not get more confusing than that. No wonder voters give contradictory answers when polled. Politicians have not been really clear on what their ideas are either.
In any case, the numbers above should serve as an important reminder: voters do like the programs we advocate for. It is a matter of making sure they understand what budget cuts entail; on the rest they are already on our side.
Paul Ryan released today the House Republican budget. In Ryan´s own words, the main objective of his plan is reducing the deficit, the biggest issue that the country is facing right now: "Yet the most important question isn't how we balance the budget. It's why."
Well, it turns out that "how" happens to be a fairly big deal, as Ryan´s budget includes a bold, radical redefinition of how the Federal government works and what it does. The main bullet points on this plan are fairly straightforward:
What remains the same:
- Social Security is held harmless.
- The cuts on military spending from the sequester remain largely in place, with only modest changes.
- Medicare cuts from the Affordable Care Act remain in place.
- Huge, harsh cuts on Medicaid, turning the program into a block grant state program.
- It turns Medicare into a voucher program (it is a voucher program, not premium support) to anyone under 55.
- Repeal of the Affordable Care Act, but leaving its tax increases in place. The nonpartisan Kaiser Family Foundation estimates that cuts on the order of what Ryan is proposing will mean around 35 million people lose their health-care coverage.
- Block granting SNAP (food stamps) and passing it on to the states, with huge spending cuts.
- Big spending cuts in education, infrastructure, research, public-safety, and low-income programs.
To complement these changes, Ryan also proposes a vaguely defined tax cut on the wealthy and lowering corporate tax rates, just in case the list above was not regressive enough. Ezra Klein describes the proposal as "social engineering with a side of deficit reduction", and he is right. For a party that spends most of its time bemoaning any tax increase as "class warfare", the budget truly looks like class warfare on behalf of the rich.
The House Republicans have decided to double down on the list of proposals that led them to defeat in last year´s election. The Affordable Care Act and increasing some revenue to pay for government programs were clearly on the ballot, and they won. The GOP negotiating position, however, remains the same, as the election never happened. The only significant change is that Ryan now seems to support the cuts to Medicare included in Obamacare that he opposed on the campaign trail.
The cuts would have devastating effects both on low income families and the middle class. The cuts on Medicaid and SNAP would really hurt the poor. Repealing the affordable care would be a major blow to working families, as the health care subsidies cover households making up to $92,000 for a family of four (400% FPL, to be more precise). Gutting Medicare will endanger retirement for all but the very wealthiest Americans.
The fact that most of the money saved from these changes is used to pay for a gigantic tax cut for the rich is just the icing on the cake; in a country were income inequality has risen to almost insane levels, putting forward a budget proposal that redistributes level upwards at this rate is beyond belief.
Budget deficit at the Federal level are an issue, but not on the short run. Interest rates are extremely low (the 10 year treasury note is at 2%; essentially zero, if we account for inflation), and they don´t seem to be going moving up in any meaningful way. Congress has passed, in the past few months, more than $2.4 trillion dollars in deficit reduction, to the point that the medium term budget outlook is basically stable. Inflicting untold amounts of pain on American families trying to solve a problem that is years in the future in a context of sluggish growth and high unemployment is deeply irresponsible.
If we were to cut deficit and reduce debt levels, Congress does need to use a balanced approach. First of all, it needs to make sure that any reduction happens down the road, not in the midst of a slow recovery. Second, the cuts need to be targeted and focus on truly wasteful programs, without hurting those that are the most vulnerable. Third, it needs to include revenue, either with higher rates (not just on the rich - Clinton-level middle class taxes were slightly higher than today, and it did not hurt the economy one bit) or reducing tax expenditures, closing loopholes and eliminating inefficient tax deductions. The Senate Democrats proposal, although with some flaws, is a much better model than they Ryan plan.
I wonder if the media will pay the same level of attention to both documents, or they still think that Paul Ryan is a reasonable guy with a reasonable plan. We will see tomorrow.