FY2008 Federal Budget

May 3 , 2007

• You can help
• Background information

“The quality of the national discussion about our economic future will affect the poor most of all, in this country and throughout the world. The life and dignity of millions of men, women and children hang in the balance. Decisions must be judged in light of what they do for the poor, what they do to the poor, and what they enable the poor to do for themselves. The fundamental moral criterion for all economic decisions, policies, and institutions is this: They must be at the service of all people, especially the poor.” --National Council of Catholic Bishops. Economic Justice for All, #24 (1986)

The Catholic Bishops challenge us in to set priorities to serve the needs of those with the least economic power.

NETWORK supports a federal budget built on fairness, economic equity and compassion for those who struggle for economic survival. 

We call on legislators to adequately fund programs which guarantee sufficient food, child care and healthcare, and adequate housing and support for higher education.  We call for employment opportunities that allow self-respect and the ability to provide for one’s family. 

NETWORK supports progressive taxation, expecting those who are most able to contribute to the common good to do so.   We know that Americans do not object to paying for human needs, but the recent tax packages suggest just the opposite. They extend tax cuts that benefit the wealthiest Americans almost exclusively.  

You Can Help

Urge your Representative and your Senators to support a budget resolution that includes domestic discretionary spending totals that equal or exceed those proposed by the House. This will provide greatersupport to women, children, the elderly and those with special needs. We continue to oppose extending tax breaks to the wealthiest individuals.

Leadership in the House and the Senate are expected to name conferees by the week of May 7, and to complete the FY08 Joint Budget Resolution to go to the floors by May 15 th. The House has proposed $7 billion more in non-defense discretionary spending than has the Senate. It is critical that conferees be urged to accept this higher number, in support of those with less economic power. This $7 billion will begin to fill the gap in services created by budget cuts over the last several years. Among the most egregious loss of services are:

• Child care for persons receiving TANF assistance at a time when increased work hours were mandated. In the last six years, 150,000 fewer children received subsidies (Center for Law and Public Policy)

• Help with affordable housing. In 2004, 150,000 fewer families were able to receive help to keep rental costs affordable (Center for Budget Policy Priorities)

• Adequate food. In 2004, 12.7 million families (most with at least one working person) had trouble putting enough food on the table. That is 11.4 % of the U.S. population – up from 10.8% in 2002.

During the last six years, the number of families falling below the poverty level has escalated. This $7 billion more in the House budget would be a down payment on helping families and communities become healthier.

In addition to the difference between House and Senate numbers for non-military discretionary spending, there is a Senate amendment that would gut the pay-as-you-go rule in the House. This will be an important point of negotiation. NETWORK supports pay-as-you-go rules, and urges legislators to find offsets from areas outside the meeting of human needs.

Domestic Discretionary Spending

The appropriations committee will distribute across spending areas the amount set as the discretionary cap. A baseline as set by the Congressional Budget Office, adjusts the 2006 spending level for inflation.   Budget requests start from this amount.

Non-defense Discretionary Spending is a portion of the amounts shown in the chart.

Mandated (Entitlement Program) Spending

Children’s healthcare is of utmost importance as the State Children’s Health Insurance Program (SCHIP) is up for reauthorization.  Nine million children in this nation remain uninsured, although six million of them are eligible for SCHIP. 
Both chambers have included enough money to allow the reauthorization to cover all children who are eligible, at a cost of $50 billion over five years.  Due to paygo, legislators are looking at ways to pay for this. 

Background

The Administration continues to praise the strength of the U.S. economy. However, the wealth felt in the highest economic brackets and the rising tide of the stock market are not having a positive effect on the economic stability of most families in the United States. 

Each of the last five years, the Census Bureau poverty data have shown that increased numbers of families have fallen below the poverty threshold, and many have fallen deeper below than in the past.  Increasing numbers of families struggle to meet basic needs of food, clothing and shelter.    

The President’s FY’08 Budget request outlines cuts to the domestic discretionary budget which would drastically reduce funds for programs such as:

• Commodity Supplemental Food Program (cut to zero, denying this support to the 440,000 low-income seniors who currently receive it)
• Child care assistance ($39 below the 2007 level for the sixth consecutive year of frozen or cut funds)
• Heating assistance (19% below the frozen 2007 level)
• Drinking water safety (20% below the already frozen 2007 level) and
• Vocational and adult education (41% below the 2007 funding level)
• Headstart (loss of $232 million, in its sixth year of cuts).

In addition to these discretionary cuts, funding to states to support their share of the State Children’s Health Insurance Program (SCHIP) would be insufficient to cover the currently insured children – and there are already 6 million eligible children who are not enrolled.

As devastating as the President’s budget request numbers are for 2008, his projection for each of the following four years would be more so – with the most significant shortfalls in 2012.

This is in the same budget request which would make permanent the tax cuts of 2001 and 2003.  All the proposed budget reductions would not come near balancing the cost of these tax cuts which give greatest benefit to those in top income brackets. Households with income over $1 million per year would receive tax cuts averaging $162,000 per year.  Households with income over $400,000 (the top 1% of the nation) will receive tax cuts averaging $67,000 per year by 2012. This is more than the total income of the typical American household. 

Tax cuts of 2001, 2003 and the 2006 tax reconciliation, and the billions spent on the wars in Iraq and Afghanistan continue to escalate the deficit.  This cannot be compensated for by cuts in domestic programs. 

NETWORK opposes such devastating cuts to programs which support the human dignity of families in need, and which hinder the development of healthy communities.

On January 31, 2007 President Bush remarked: “… income inequality disparities is real.  It’s been rising for more than 25 years….  And the question is whether we respond to the income inequality we see with policies that help lift people up, or tear others down.”   The President's budget requests, both revenue and spending priorities, drive the wedge further between families with great wealth, and those struggling to survive. 

This leaves a tremendous task for the 110th Congress, to develop budget resolutions in response to the administration request which will turn the nation’s economic direction from growing “income inequality disparities” to a strong support for the general welfare addressed in the United States Constitution.

NETWORK proposes the following for Congress’ work on the Fiscal Year 2008 Budget Resolution:

Entitlement Spending

• Ensure that states receive enough federal funding to ensure that all children currently eligible for the  (State) Children’s Health Insurance Program (SCHIP) are able to be enrolled.  States will need approximately $60 billion in new federal funds over the next five years

Taxes

• Enforce pay-as-you-go rules on all tax actions.  This will require that any extensions to the 2001 and 2003 tax cuts will need to be “paid for” by other revenue sources.
• Ensure continuation of the Alternative Minimum Tax (AMT).  Continue study for development of new policy for fair, progressive taxation.  The AMT affects approximately the wealthiest 2.6% of households, at this time.  A one year patch for 2007 is estimated to reduce revenue by $40 billion over five years. 

Domestic Discretionary Spending

• Fund the following programs at 2.5% above the 2007 funding level, adjusted for inflation:

• Commodity Supplemental Food Program
• Child care assistance
• Low-Income Heating and Energy Assistance Program
• Drinking water safety
• Vocational and adult education
• Headstart.