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The terrible, horrible, no good, very bad budget “cuts”

The terrible, horrible, no good, very bad budget “cuts”

Last updated on: May 24, 2017 at 8:28 am by Jane the Actuary

The terrible, horrible, no good, very bad budget “cuts” 2017-05-24T08:28:14-06:00 Jane the Actuary

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from https://www.flickr.com/photos/chrstphre/5489717927

Yes, you’ve heard by now: Trumps’ budget cuts government spending for the needy and will probably cause everyone to starve to death. Except that details are surprisingly difficult to come by. After a bit of searching, I landed on a useful Washington Post article, which started by listing the cuts: a 29% drop in food stamps, a 19% drop in the Children’s Health Insurance Program, a 17% drop in Medicaid, etc., and — for all that the progressives in my twitter feed have been decrying the injustice of Social Security Disability cuts when Trump promised “no Social Security cuts” (which is haggling over how Social Security is defined), a 2% cut here.

But then, one by one, the Post features these programs, and the cuts over the next 10 years relative to otherwise-projected spending.

Food stamps? That is indeed a significant cut, but one that moves it to somewhat above 2007 spending levels. No information on how the proposal achieves this, but presumably it’s in part a matter of adding back in work requirements that had been removed.

CHIP? Yes, that’s also a real cut, but there’s some sort of context missing here, as the amount of spending has, in the past couple years, nearly doubled. Was this a part of Obamacare? Some executive-order expansion of eligibility? There’s some bigger story here that I don’t know.

Medicaid? This isn’t a cut at all. It’s just a decrease in the projected growth in spending. To be sure, the Post’s chart overstates Trump-proposed spending because, it reports, it is not reflecting an unspecified additional cut. And a fair portion of the projected spending is increased spending on long-term care for the elderly, about which there’s little to be done in terms of increased efficiency — just, perhaps, a bit of fraud reduction in combating families who hire experts to advise them on how to appear poor while still handing wealth down to the next generation.

TANF is a real cut.

Unemployment insurance? Again, not a cut so much as a decrease in expected increases. (And is this a real cut in benefits or just a sunnier assumption about economic growth?)

EITC? Again, a decrease in increases.

Likewise for SSI & SSDI — and, again, I haven’t been able to find more information but the latter program is ripe for reform; unlike pretty much everywhere else, we are missing a “partial disability” benefit that helps people return to work.

And Medicare and Social Security are not slated for cuts at all.

Now, look, I am not going to say that Trump’s cuts are harmless. And I get that, when taking into account population growth and inflation (assuming these figures are nominal rather than real dollars), year-over-year increases are appropriate — which means that I’d really rather see these figures on a per-capita, real-dollar basis.

But I am monumentally irritated that this apocalyptic reporting leaves one wholly unable to separate the good from the bad, or even the bad from the very bad. And it’s not just this article – everything I look at is the same.

************************

Did some more looking. There’s a Vox article, “The trillions in shocking cuts in Donald Trump’s budget, explained,” which, as it’s title promises, explains some of these cuts. For instance,

Starting in 2020, rather than matching state Medicaid spending, the AHCA would give each state a set amount of money per person. The amount would grow from year to year according to the medical component of the Consumer Price Index, to account for inflation. That’s essentially a cut, since the medical component of CPI is growing more slowly than Medicaid costs are expected to grow right now.

But the Trump administration decided it wasn’t a large enough cut. Office of Management and Budget Director Mick Mulvaney, on a press call, explained that he wants to change the formula by which the per capita amount grows so that Medicaid spending rises more slowly. That would add billions more to the already massive cut the AHCA includes.

Now, it’s problematic for baseline Medicaid to be projected to be growing more than medical CPI. Is this because of the increase in the number of seniors using the long-term care benefit? That sentence begs for explanation, as does the further comment that the new proposal involves lower projected increases. What is this proposed new formula? Or has the administration not provided this information?

Trump’s budget would slash benefits and add new work requirements to the program. SNAP already has some work requirements for able-bodied adults, especially ones without children; the latter can receive benefits for no more than three months per three-year period, unless they work at least 20 hours a week. Given the scale of the cuts being contemplated, either these requirements or other measures must kick one-quarter of beneficiaries off food stamps, or the program’s average benefits will have to go down by 25 percent (which for a family of three would mean getting $3,438 a year rather than $4,584), or some combination of benefit cuts and enrollment declines would have to happen.

The budget also plans to introduce a state “match,” requiring states to contribute some of their own funds to SNAP in order to get federal funds. “We want to slowly phase in a state match,” Mulvaney said. Recalling his time as a state legislator, he said, “We didn’t have incentive to fix it. We want them to have skin in the game to make the programs better.”

The “match” requirement has a certain amount of logic, in that I’ve read that states, with no skin in the game, find loopholes in the eligibility requirements to move more people onto the program — but it would be far better to eliminate the loopholes. And states would potentially have more incentive to eliminate fraud (yes, I know, there are disputes about what portion of benefits are fraudulently resold; some sources claim “virtually none”, a recent sympathetic book on the cashless poor makes it out to be more routine). But SNAP and Medicaid are different conceptually — SNAP involves simply giving cash, so there isn’t really much of a means to design a “more efficient” program to reduce costs; in a way, the poor already have that incentive to make their dollars stretch as far as possible. Also, as a side comment on work requirements: Maine instituted these and saw a substantial drop in non-parent participants, who chose to leave the program rather than participate in the “work” requirements (which could be met in various make-work sorts of ways), and I saw explanations that this was because these people were already working, just under the table, so they didn’t want to miss their job to meet these requirements. Don’t know whether this was ever anything other than speculation, though.

At the same time, though, one significant element of the increase in Food Stamp spending over the past decade is the substantial push that’s been made, by the government and by social service agencies and other groups, to get everyone who meets the eligibility requirements to sign up rather than just trying to pay for their groceries themselves by diligent budgeting, to get them to feel comfortable that it’s “just another government program” more akin to taking the homeowner’s deduction on property taxes than “taking welfare.” (I recall reading a fundamentalist-Christian “mommy blog” by the wife of a graduate student, talking about their family’s finances, in which she matter-of-factly said that they used Food Stamps to minimize the amount of student loans, and to allow her to stay home with the children.)

The biggest disability cut is vaguely labeled, “Test new approaches to increase labor force participation,” implying that the budget will require that SSDI test a number of new approaches to get beneficiaries back into the workforce. It budgets $100 million a year in the first five years for testing, but then assumes that the approaches they choose will save more than $49 billion in the final five.

We don’t know what exact measures will be introduced to try to promote work. But many ideas that would increase work among disabled Americans — like increased access to long-term supports and services, subsidized jobs, more funding for vocational rehab programs, and a partial disability benefit available for those who can work part time — would cost more money to the federal government, not less.

Actually, per my comment above, one of the biggest things our SSDI program lacks is a partial disability benefit and continuing health insurance support, and it’s my understanding that large numbers of people don’t seek any work at all because SSDI and related benefits are all-or-nothing. But these changes are not budgetary changes; they’re legislative.

Finally, the budget includes . . . a substantial cut of $40.5 billion over 10 years to the earned income tax credit and child tax credit, implemented by requiring all beneficiaries to have a Social Security number.

This may seem reasonable, but many undocumented parents claim those benefits for the sake of their US citizen children.

This item is misleading. After all, there are plenty of welfare benefits which are limited to citizens, and the “child tax credit” is not allocated to children, as with Food Stamps or Medicaid, but to the taxpayer-parent. Besides, as it stands, EITC already requires Social Security numbers. The trouble with the EITC is that it is fraud-ridden (see, for example, here), to the tune of about 1/4 of payments (among other items, again, per the cashless poor book, among other sources, since there’s no requirement that the claimant for a given child be the custodial parent, poor folks who can’t benefit from the EITC because they haven’t worked, “sell” their child’s credit for part of its value to someone else who can claim that child and get the tax benefit). The Child Tax Credit does not, and that results in even more fraud. What’s more, as even factcheck.org reported,

Non-citizen children can qualify if they are legally residents and have at least an ITIN. And the requirements aren’t vigorously enforced. The IG report said the IRS management doesn’t demand that parents submit documentation to prove that the children they are claiming actually reside in the U.S., something the IG recommended and IRS management said it lacked legal authority to do. So it is at least possible that some refunds are being paid based on children who aren’t citizens, or who aren’t even living in the U.S.

Now, each of these programs could itself merit a blog post on its own — and there’s a lot more going on in the Trump budget, given his proposals of cuts to other agencies. But in the end, it’s probably not worth all the digging it would require, since this budget is not of any particular relevance; what matters is what the House and Senate do, and the fact that they’re a bunch of screw-ups who will probably not do much of anything.

Image: from https://www.flickr.com/photos/chrstphre/5489717927

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