Federal Budget Hurts the Poor, Grows the Deficit

The complex and seemingly interminable federal budget battle continues toward a possible conclusion in February. Each house of Congress has passed a “budget reconciliation” bill that includes many different provisions that would resolve the federal budget for federal fiscal year 2006 (October 2005 to September 2006). The most recent Senate version was passed just before Christmas and is slightly different from the version previously passed by the House. Now it must go back to the House for another vote. That vote is currently scheduled for February 1.

The reconciliation bill is a faithful, somewhat scaled-down expression of the Bush administration’s priorities. It contains many budget cuts in important programs, including Medicaid, for low-income people. It also uses that “saved” money from those cuts, plus additional money that the government does not have to provide tax cuts for the wealthiest few, thus expanding the already-record federal deficit. (Details can be found at www.cbpp.org.) Those who oppose the reconciliation bill can and should press their representatives, especially the Republicans who control the outcome, to vote “no” in February.

It is extremely difficult to understand the rationale for this budget. The government has immense and important jobs to do that require adequate funding. These jobs include extraordinary ones such as managing the Iraq and Afghanistan wars, the larger war on terror, and administering hurricane relief. However, many observers say that these tasks are more expensive because of mistakes made by the administration.

On a larger and ongoing scale, poverty in general, and child poverty in particular, is increasing. The incidence of poverty has less and less to do with whether a family’s income comes from employment—the fastest-growing poor population is employed. More and more people, especially employed people, have no health insurance or have inadequate coverage. All health care is becoming prohibitively expensive.

A smart and proactive government role, including investments, is necessary to attack these problems and deliver a measure of support to families experiencing hardship. However, the Bush administration was loyally obeyed (or exceeded) by its congressional allies who proposed a $20,000 a year raise (through tax cuts) to millionaires who each have already received something like $100,000 a year in tax relief under the first Bush budget. Now they want that $100,000 raise be made permanent. As a result of this largesse to the wealthiest, the administration claims the government cannot afford to address important tasks adequately.

There is no moral or values-based argument that can sustain this approach, and none is really offered by its proponents. Indeed, the approach seems closer to a bald and polarizing assertion of power in support of “ours” (businesses and individuals who already have the most money) over, and at the expense of, “theirs” (individuals and families who have less). There seems to be an attempt to turn this assertion of power into a virtue, but it falls flat. There is not much moral difference between the power rationale—“I can do it, therefore I will do it”—and the attempt to turn it into a virtue—“I can do it, therefore I should do it.”

The Bush/Republican budget approach is dressed up not in a values-based argument but an economic one: If those with the most money have more money, then all will be well. We hope they will invest the added money. When they invest, it is theoretically possible that there will be more jobs (although this must remain theoretical— there is no duty or obligation or statistically certain job creation outcome—market forces will decide). If, in the end, there are more jobs, then it is theoretically possible that some of the jobs will pay wages that allow families to escape poverty. A smaller number might receive wages that enable them to support a family. Meanwhile, because we have given away all the money to the wealthiest few, the budget will defund programs that help the working poor make ends meet and satisfy basic needs such as health care.