Yesterday the senate narrowly passed a budget bill to cut $40 billion dollars of federal spending by ending funding for foster care, child support and student loans. The bill would also impose new fees on Medicaid recipients and new work restrictions on state welfare programs. We speak with Robert Greenstein of the Center on Budget and Policy Priorities about details of the bill. [includes rush transcript]
The $40 billion dollars in budget cuts is dwarfed by the $70 billion dollar cost of a Republican proposal expected to be voted on next year that would extend previous tax cuts enacted in 2001 and 2003. The contentious budget bill was passed by a 50 to 51 vote. Five Senate Republicans joined the Democrats in opposing the measure. Their combined votes would have led to a 50-50 tie. However, Vice President Dick Cheney cut short his trip to the Middle East in order to cast the tie-breaking vote.
As president of the Senate, Cheney was able to break the deadlock and pass the measure. Critics of the bill note that the poor and middle class would bear the brunt of the cuts. Democratic Senate leader Harry Reid called it "an ideologically driven, extreme, radical budget. It caters to lobbyists and an elite group of ultraconservative ideologues here in Washington, all at the expense of middle class Americans." The American Council on Education announced this is the biggest cut in the history of the federal student loan program.
- Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities.
AMY GOODMAN: We are joined in Washington D.C. by Robert Greenstein. He is the Executive Director of the Center on Budget and Policy Priorities. Welcome to Democracy Now!
ROBERT GREENSTEIN: Good morning.
AMY GOODMAN: It’s good to have you with us. Well, tell us about this budget.
ROBERT GREENSTEIN: This bill, as you noted, cuts over $40 billion over a five-year period, but you really can’t get the flavor of it just from citing the budget numbers. If you take, for example, the Medicaid program, which is the principal health insurance program for tens of millions of low-income children, families, elderly people and people with disabilities, this bill makes very major changes in that program. It authorizes states to particularly raise the amounts that people just above the poverty line would have to pay each time they needed to go to the doctor or the hospital. You take a family of three that’s making, say, $17,000 a year, various procedures, inpatient, outpatient, for which they now are charged $3 per visit, under this new bill they could be charged, depending on the treatment, anywhere from $20 to $160 for each one of those treatments or procedures.
We have a body of research, Amy, that is this high that demonstrates that when you put co-payments of even a fraction of that size on low-income people, that in many cases they forgo the treatment or they don’t take the medication. Sometimes they will get better on their own, but the research shows that in many cases they get sicker, sometimes seriously so.
The bill also authorizes states to substantially reduce the healthcare services that are covered under the Medicaid benefit package for various groups, such as working poor parents. The changes in Medicaid are pretty significant.
Another change in Medicaid, under this bill, native-born U.S. citizens would have to provide birth certificates or passports to stay enrolled in the Medicaid program. This is expected to have a racially discriminatory effect, because studies show that as many as one in five elderly African Americans don’t have birth certificates, in many cases because they couldn’t be born in a hospital, because in the South in those days before World War II, blacks often couldn’t be admitted to hospitals, and you often got your birth certificate triggered in a hospital.
In the area of child support enforcement we have had a bipartisan consensus for 15 years in Washington with heavy Republican involvement that absent parents should pay their fair share, and there is a program, which the federal government helps fund, to make sure that child support payments are collected and provided to the children and their mothers. This bill substantially cuts federal funding for that program. The Congressional Budget Office, which is Congress’s own official analyst of these things, has reported that as a result of this cut, $8 billion less in child support payments owed by non-custodial parents will be collected and provided to the children and their mothers over the next ten years. In other words, this will cause significant increases in poverty.
The changes in welfare are also pretty profound. They’re the biggest changes since the 1996 welfare law, and they rewrite the '96 welfare law to make it, in key respects, substantially harsher than the ’96 welfare law itself was. There would be new requirements for the percentage of parents that have to be in workfare type programs that are set in such an unrealistic fashion that states couldn't meet them and would then face fiscal penalties; and the easiest way for the states to deal with, to ease those fiscal penalties, would be by cutting the rolls. In particular, for poor, two-parent families, married parent families, the new standards would be so unrealistic that not a single state in the United States could meet them. They would be required to have virtually every two-parent family in a work program virtually full-time every week of the year. If a parent had to miss a couple days from work because he or she was sick or their child was sick, they wouldn’t meet the standard for that month; and if a small number of parents were in that circumstance, the state would fail to meet the standard and would be penalized financially by the federal government. Experts expect that many states will cut large numbers of poor two-parent families from their rolls in coming years in order to avoid these penalties.
As you noted, there are also major cuts in the student loan program. There are major changes in the long-term care part of Medicaid that will make it harder for a number of people to get long-term care coverage when they need it. There are a variety of other changes, as well. What’s striking is that the Senate had earlier passed a bill that didn’t have a single low-income cut of this sort in it.. None at all. The House, by contrast, had passed an extremely harsh bill, and the difference was that the Senate got a lot of savings in the original Senate bill by restraining well known overpayments to managed care companies in Medicare and dealing with the very large mark-ups that the big drug companies get for drugs provided in Medicaid by reducing the prices Medicaid pays for drugs.
What happened behind closed doors over the weekend was that the drug companies got protected. The cuts that affected them were taken out. The managed care companies got largely protected. Nearly all of the changes that would have restrained excessive payments to them got taken out, and the cuts got redirected more heavily towards low and moderate income families instead. Probably not an accident. If you look at the campaign contribution data, you find that every significant House Republican leader who has something to do with Medicare and Medicaid policy is among the top recipients of campaign contributions for the 2006 election cycle from both the managed care companies and the drug companies.
AMY GOODMAN: Bob Greenstein, Executive Director of the Center on Budget and Policy Priorities, we only have a minute, but I just wanted to touch on the level of burden on students right now. Nearly a third of all the savings in the final budget bill comes from student aid, according to the Congressional Budget Office. Under the bill, college students would pay higher interest rates on loans, banks receive lower subsidies, Education Department will work with the I.R.S. to ferret out students and parents who underreport incomes on financial aid applications. In this last minute, the effect on students.
ROBERT GREENSTEIN: There will be effects on students, I think, both in terms of fees and interest rates. The other thing that should be said is that the savings from the students, from working poor families (who I think will actually be hit harder than students), and everybody else who suffers under this bill, not a dollar of those savings is going to reduce the federal deficit. Every dollar is going to offset a portion of the cost of tax cuts that’ll be passed when Congress comes back after its recess; and those tax cuts will go heavily to very high income people, and, in some cases, a large share of them will go to the people that make over a million dollars a year. So, it’s really a transfer in many — It’s not deficit reduction. We’re talking about a transfer from people who have greater needs to people at very high income levels and powerful forces that make large campaign contributions.
AMY GOODMAN: Bob Greenstein, thanks so much for being with us, Executive Director of the Center on Budget and Policy Priorities. The website www.cbpp.org, and you can go to our website at democracynow.org for all links.
I’ll end with a couple of paragraphs from the New York Times today: "Republican negotiators said virtually all the cuts in student aid would be borne by banks and other lenders, an assertion sharply disputed by Democrats and college administrators, who said two-thirds of the savings would be at the expense of students and their families. Even as it makes those cuts, Congress is creating a new program for students from low-income families who are eligible for Pell grants. The amount of aid will not be based on financial need. To qualify, students would have to be U.S. citizens, have completed a 'rigorous secondary school program of study' and be taking courses full-time at a degree-granting institution of higher education. The student would have to maintain a cumulative grade point average of at least 3.0. Juniors and seniors will be eligible only if they’ve declared a major in the physical or life sciences, computer science, math, technology, engineering, or a foreign language deemed critical to national security." College and university groups, as well as most Democrats, oppose the overall bill. As it becomes harder for students to get money for college, it seems increasingly that it puts pressure on young people to go into the military as an avenue to get to college.