EPI, Campaign for America’s Future and State Groups Release Reports Detailing Damage Caused by Bush Tax Cuts

Check for the report on the problems your state will face if the Bush tax cut goes through – and find out how to work to stop it.

A person can’t open a newspaper these days without catching sight of at least one article reporting on recent slashes in some local or state budget or in one of the many threads of the country’s social safety net. From coast to coast, over the course of just the last two weeks, cuts have been announced: Oregon Governor Ted Kulongoski (D) announced that several million dollars will be cut this year and next from the state’s Medicaid program, which had been heralded for its success in providing mental and dental benefits, in addition to the traditional hospital care, to Oregon’s poor, elderly, and disabled residents; newly-elected Maryland Governor Bob Erhlich (R) has proposed a $25 million cut in state-funding for child care for low-income parents – this is on top of a 70% cut in funds for Maryland’s Child Care Resource Centers Network, which provides families of all income levels with guidance and information on available local child care providers.

EPI, Campaign for America’s Future and State Groups Release Reports Detailing Damage Caused by Bush Tax Cuts

Check for the report on the problems your state will face if the Bush tax cut goes through – and find out how to work to stop it.

A person can’t open a newspaper these days without catching sight of at least one article reporting on recent slashes in some local or state budget or in one of the many threads of the country’s social safety net. From coast to coast, over the course of just the last two weeks, cuts have been announced: Oregon Governor Ted Kulongoski (D) announced that several million dollars will be cut this year and next from the state’s Medicaid program, which had been heralded for its success in providing mental and dental benefits, in addition to the traditional hospital care, to Oregon’s poor, elderly, and disabled residents; newly-elected Maryland Governor Bob Erhlich (R) has proposed a $25 million cut in state-funding for child care for low-income parents – this is on top of a 70% cut in funds for Maryland’s Child Care Resource Centers Network, which provides families of all income levels with guidance and information on available local child care providers.

This year’s cuts are not limited to state-level funding. The President’s proposed budget for FY 2004, which was released earlier this month, dramatically changes the nation’s current housing voucher program for low-income residents by forcing the responsibility and much of the costs onto states, underfunds vital programs such as Head Start and education assistance for disadvantaged students, and weakens clean water protections, among many other changes.

Any one of these cuts would, undoubtedly, be bad enough on their own, but as is the case with so much of the President’s budget, the real damage comes in a special multi-faceted whammy, a “one-two-three-four punch,” if you will, that unites federal, state, and private funding cuts into a wave that will dramatically undermine this country’s social protections of those who need them most.

A Recipe for Disaster:

1. Enact tax cuts – the more costly and the more skewed to the upper crust, the better. If it’s not possible to make the first round of cuts permanent, keep trying, but also add more cuts – even bigger than the first round of cuts. This step is crucial as it is the most efficient way of sucking up revenue so that it simply isn’t available for spending on other purposes. Even better is to bring the country into an extended period of fairly large deficits, since this will help to augment the case for the need for “belt tightening.” (Note: An added benefit of these tax cuts is that they also provide for automatic reductions in state revenue, much of which is tied to federal tax calculations.)
   
   
2. Emphasize a commitment to compassionate government – Ignore what many will understand this to mean, i.e., do not provide adequate funding for education reform, protection of the environment, health care for low-income children and their families, etc. Instead, show that a compassionate national government actually provides mandates to states to provide these services (without sufficient funds or oversight) and outsources this responsibility to nonprofits. Require states to increase the work demands on low-income mothers most in need of government aid, while funding for child care (so these mothers can work) is cut. Do not worry about whether, in a time of historical state budget deficits and an erratic stock market, these nonprofits will be able to secure the necessary funding from local government, individual donors, and foundations to provide treatment to drug addicts, after-school care to young children, job training to undereducated adults, or access by all to the arts and cultural activities.
   
   
3. Deny fiscal relief to states – Though, in this plan, state governments are fundamental to keeping up the appearance of a national commitment to “compassionate government,” do not provide fiscal relief to states that are facing an estimated cumulative budget deficit of nearly $80 billion for the coming year. Sure, it would be easier for states to actually pick up the slack the federal government intends to drop in the way of providing housing assistance to low-income families and medical care and prescription drug coverage to the working poor if the states had adequate resources, but such resources would require funding from the federal government – which isn’t available (see Step 1).
   
   
4. Repeat, as necessary.

Few aspects of the nation’s social safety net and service providers are spared the ramifications of this process:

States, whose Constitutions require them to balance their budgets, are trying desperately to break even in the face of huge budget gaps, increased homeland security costs, and an increased number of out-of-work residents who need their help:

• The Washington Post reports that Maryland’s cuts in child care funding means that “families on the edge of poverty, earning 50 percent of the state median income or less” will be placed on a waiting list to receive vouchers for child care. The new restrictions limit this assistance to only those families currently on welfare – even though only a small percentage of current recipients fall under this category. According to the article, the office of the Governor “does not consider child care a ‘core’ mission, as it does public safety in these times of terror.”

These cuts don’t affect only state programs, but extend all the way down to local-level community and nonprofit service providers:

• Jan Richter of Connect for Kids follows the real trickle-down effect of budget cuts at the national and state levels, all the way down to community-level programs. In a recent report, she notes that Washington State’s Lutheran Community Services Northwest has had to reduce “services aimed at strengthening and preserving families at risk;” another faith-based group in North Carolina can’t find the funding necessary to meet its challenge grant to provide support for children whose parents are going through a divorce; and Connecticut has ended its contract with the Connecticut Children’s Health Council, which serves as a watchdog over health care for children in low-income families.

For many of these nonprofit service providers, the slowed economy and federal, state and local budget cuts only compound cuts they have had to enact due to a drop in contributions and grants from individual and foundation donors that have seen their own budgets shrink:

• The New York Times reported last week that New York City’s great museums, concert halls, theatres, and other arts programs have suffered dramatic cuts from all sources. One of the city’s, and the country’s, finest arts institution, the Metropolitan Museum of Art, is projecting a budget gap of more than $5 million, which follows on the heels of a budget gap this year of similar size. To meet this gap, the MET will increase its suggested admission price to $12, among other tactics. The cuts to the MET and other institutions, including the American Museum of Natural History, the Bronx Museum of the Arts, and the Brooklyn Academy of Music, reflect economic effects such as drops in donor contributions, and a drop-off in attendance, as well as proposed city budget cuts of 20 percent to 30 percent.
  
  
• Another recent New York Times article reveals that New York City’s funding crisis is not unique. Arizona, California, Massachusetts, Missouri, and New Jersey have already, or soon will, cut funding for the arts – with some states, such as Missouri, eliminating their state arts councils. The effects of these state-level cuts, according to the Times article, extend further by eliminating funds from federal and private matching grants. In addition, though in better times, other wealthy donors could be relied upon to step in and meet the funding gaps, the nation’s economy has also shrunk many private revenues, as well.

One bit of good news in all of this is that the investments of some private funders still seem to be doing well – enabling them to do good: New York City’s billionaire mayor Michael Bloomberg made a donation of $10 million that will be distributed to the city’s cultural institutions.

Perhaps this will start a trend whereby policy makers at the state and national levels dip into their well-padded private purses to bail out the programs their governments are supposed to be funding. If Bush secures his next round of tax cuts (see Step 1, above), estimated to grant those earning more than $375,000 each year an additional $30,000, they’ll certainly have enough money to go around.