2011 Federal Policy Recap

With the number of children in poverty in New England on the rise and the economy slow to recover, New England Consortium (NEC) members spent 2011 educating policymakers and the public about the potential impact of federal budget and deficit reduction policies on poor children and their families.

Poverty on the Rise

Census Current Population Survey (CPS) data released in September 2011, revealed that the share of Americans living in poverty in 2010 reached 15.1 percent while the share of children in poverty hit 22 percent — both the highest levels in nearly two decades. Nationwide, from 2009 to 2010, 950,000 children slipped into poverty and the number of children living in extreme poverty (below $8,700 for a family of three) increased by almost half a million. Today, more than one in five children are poor. For a family of four, that means living on an annual income of less than $22,314.

In New England, the number of children living in poverty is also on the rise, increasing to above 425,000 in 2010. And, without critical supports like Medicaid, the Supplemental Nutrition Assistance Program (SNAP), Unemployment Insurance, and the Earned Income Tax Credit (EITC), these numbers would be much worse. At the same time, income inequality is as high as it has been since before the Great Depression. Click here to see how select programs kept millions out of poverty.

Throughout the year, NEC called on Congress to take a balanced approach to deficit reduction – one that includes savings from both spending and revenues and one that protects working families and helps prevent greater numbers of children from slipping into poverty.

Deficit Reduction

In February, NEC called on Congress to adhere to a set of key principles in crafting a long-term deficit reduction proposal. Consortium members encouraged lawmakers to reject policies that would push greater numbers of children and families into poverty, that relied exclusively on deep discretionary spending cuts to achieve savings, that placed harsh caps on federal spending, and that failed to protect low-income programs.

Click here to read a copy of the Consortium’s deficit reduction principles letter to the New England Congressional delegation.

Federal Budget

In April, NEC called on Congress to reject H. Con. Res. 34, the budget resolution introduced by Budget Chairman Paul Ryan and approved by the House of Representatives on April 15. The bill would have resulted in harmful structural changes to programs and more than $4 trillion in spending cuts over 10 years, an estimated 2/3 of which would have had a devastating effect on low-income programs like Head Start, Pell Grants, SNAP and Medicaid. And, despite such drastic cuts, the plan would not have achieved significant deficit reduction, because most of the $4.3 trillion in cuts would have paid for tax breaks for the wealthy. Ultimately, the plan was rejected and the budget debate became entangled in the default crisis that dragged on through the summer.

Budget Control Act

On August 2, President Obama signed the Budget Control Act of 2011 into law. The new law represents the deficit reduction deal struck between the President and Congress to raise the debt ceiling, so the federal government could continue to borrow to meet its financial obligations and operate through 2012. The law increased the debt limit by $900 billion and reduced the deficit through spending cuts by approximately the same amount over the next 10 years. Because these spending cuts were imposed entirely on discretionary spending programs, they had a disproportionate impact on low-income children and families. In addition to these cuts, the law also called for a new Joint Congressional Committee (often referred to as the “Super Committee”) to come up with additional savings by the end of 2011. They were charged with finding $1.2 trillion over ten years. If the Committee failed to reach agreement, automatic spending cuts would take effect January 2, 2013, and would fall equally on defense and non-defense accounts, including both discretionary spending and some entitlement spending.

Over the summer NEC member organizations weighed in on the process, calling for a balanced approach and highlighting the potential harm of some of the ideas being debated:

• Proposed Medicaid Cuts Hit State Residents, Sharon D. Langer (Connecticut Voices for Children) and John Hogarth (Connecticut Coalition on Aging), Hartford Courant, July 30, 2011
• A balance of cuts and revenues needed to resolve default crisis, Dean Crocker (Maine Children’s Alliance) and Christopher St. John (Maine Center for Economic Policy), Bangor Daily News, July 27, 2011.
• Medicaid at risk in the federal deficit reduction fight, Sheila Reed Associate Director (Vermont Voices for Children), VT Digger, August 26, 2011

The Budget Control Act included some important steps to protect low-income children. However, without significant budget control through increased revenue, Congress could not achieve a balanced package. NEC members expressed concern that the new law could undermine Social Security, Medicaid, Medicare, education, housing, nutrition aid, services for children and for seniors, unemployment insurance and other key investments unless the Joint Committee was able to put forward balanced proposal. In particular, NEC was concerned about the future of the Medicaid program which serves more than 1.1 million children across New England.

Click here to read NEC’s September 19 letter to Joint Committee member, Senator John Kerry (D-MA). Similar letters were also sent to each member of the New England Congressional delegation.

Ultimately, the Joint Committee was not able to agree on a proposal and pursuant to the BCA, automatic spending cuts are set to take effect in 2013. Entitlement programs targeting low-income individuals and families, such as Medicaid, the Children’s Health Insurance Program (CHIP), SNAP, child nutrition programs, Pell grants and the refundable tax credits such as the EITC, are largely exempted from these cuts, but NEC remains concerned that these protections may be undermined in the next Congress.

Medicaid and the Affordable Care Act

Throughout the year, the Medicaid program which provides long-term care to millions of seniors, helps New Englanders with disabilities live independently in their communities, and ensures children can see a doctor when they get sick, was regularly under attack. NEC members spent much of the year defending the program and its importance in helping vulnerable Americans weather tough economic times. Without adequate federal support, states would either have to significantly increase spending at the state level or drastically cut benefits, cap or reduce eligibility levels for seniors, people with disabilities, children, pregnant women, and working parents, just when people need health care supports the most. States might also choose to slash already low reimbursement rates for providers, driving providers from the program and limiting the number of options available to families.

The potential for deep cuts in the Medicaid program would also undermine the implementation of the Affordable Care Act in 2014 and shift more of the health care burden onto states, which would in turn shift the cost onto localities, taxpayers, and families.

In April, NEC joined with the New England Alliance for Children’s Health (NEACH) in a letter to New England Senators asking them to reject efforts to repeal the Medicaid and CHIP maintenance-of-effort (MOE) provisions in the Affordable Care Act, to convert Medicaid into a block grant program, or to otherwise cap Medicaid spending.

Child Care and Early Education

One of the few areas of domestic discretionary spending that escaped deep cuts in 2011 was Child Care and Early Education. The final federal appropriations bill for Fiscal Year 2012 [October 2011 through September 2012]increased funding for Head Start by $424 million over last year’s level, increased funding for child care by about $60 million, and included $550 million for Race to the Top, which will continue to allow those funds to be used for the Early Learning Challenge competition. In a time of economic fragility, supports like early childhood programs give children a strong start and help their parents go back to work.

Jobs Support

Congress spent most of December debating whether and for how long to renew a package of supplemental federal benefits for the long-term unemployed. Unable to come to agreement on a long-term proposal, Congress approved a two-month extension of the expiring payroll tax and jobless aid provisions on December 23rd. The law also temporarily extended the Temporary Assistance for Needy Families (TANF) program FY 2011 levels — approximately $16.5 billion per year. While this was good news for millions of Americans still struggling in this weak economy, these issues will need to be revisited again in February of 2012.