President’s Budget Shows Poverty Reduction and Deficit Reduction Are Not Mutually Exclusive Goals
President Barack Obama’s proposed budget for fiscal year 2013 sets a responsible course for rebuilding the economy so that it works for everyone, not just the privileged few. Our middle class is the engine of economic growth, but is threatened by dwindling public investments, a tax system increasingly rigged to benefit the wealthy, a fraying safety net, and assaults on what should be the bedrock guarantees of Medicare, Medicaid, and Social Security.
The president’s budget protects those guarantees, boosts critical investments, and takes steps toward rebalancing the tax code so that all pay their fair share. And it does this in a fiscally responsible way, charting a path that nurtures the economic recovery while reducing the federal deficit, all without asking the middle class to shoulder a disproportionate share of the burden.
President Obama’s budget blueprint released today illustrates that fighting poverty and taming the deficit can be achieved together. The administration’s proposal lays out critical investments that will help more struggling Americans join the middle class and encourage shared economic growth. These strategies not only cut poverty; they are in fact central in putting us on stronger fiscal footing in the long run.
Half in Ten, a project of the Center for American Progress Action Fund, The Leadership Conference on Civil and Human Rights, and the Coalition on Human Needs, believes that to cut U.S. poverty in half in 10 years, we must enact policies to create good jobs, strengthen families, and promote economic security. The president’s budget makes significant strides in all of these areas but it also includes a number of damaging cuts that could be harmful for our nation’s most vulnerable citizens.
The analysis below provides background on key elements of the president’s budget that relate to Half in Ten’s goal of cutting poverty in half.
The president’s budget includes critical investments to create good jobs, prepare and train workers for growing industries, and improve job quality for all workers.
For starters, in the immediate term the president proposes continuing the payroll tax cut and unemployment insurance, which create customers for American goods and services and keep small businesses humming.
The blueprint also contains promising job-creation strategies such as connecting low-income and long-term unemployed workers to summer and year-round subsidized jobs and work-based training opportunities. It keeps teachers, firefighters, and police officers on the job, and helps workers in distressed communities find employment meeting needs in their own neighborhoods. And the proposed investments in building and repairing roads, bridges, transit, broadband networks, and schools will put people to work in the short term and lay the groundwork for stronger economic growth in the long term.
The budget further includes critical investments in education and worker training to help prepare workers to fill the jobs of the future. The president’s budget includes a $30 million increase in cradle-to-college investments such as “Promise Neighborhoods” that build networks of support to help students in high-poverty neighborhoods succeed. In the context of tight budget caps, the budget finds room for further investments in Head Start and child care, providing low-income children with critical early-learning building blocks.
In addition, the proposal takes steps to keep college affordable and to prepare American workers to fill good jobs. The budget maintains the maximum Pell Grant, creates new work-study opportunities, and makes permanent the American Opportunity Tax Credit, which helps more than 9 million families afford college. It also increases funding for proven programs such as YouthBuild that help low-income youth finish high school and get job training, and provides for interagency approaches to better serve other at-risk youth who are neither in school nor in the workforce.
Finally, the president’s budget takes steps to improve job quality for low-income workers. It provides a $5 million State Paid Leave Fund to support states that want to offer paid-leave programs—a step that could ultimately lead to greater flexibility for low-wage workers who are often forced to choose between their job and caring for a sick kid. It also funds enforcement mechanisms to ensure workers are not misclassified as “independent contractors,” which robs them of the pay and benefits they’re entitled to.
The president’s blueprint recognizes the key role that strong families play in creating greater opportunity for children, and to that end it provides funding to help support better outcomes for families.
The budget recommends funding to help children in the child welfare system with a goal of reducing abuse and neglect. It also supports evidence-based policies to reduce the instance of teen and unplanned pregnancies, and sustains efforts to combat violence against women and to assist victims of domestic violence.
The budget also continues the president’s commitment to promoting fatherhood. The proposal includes funding to incent states to modernize and strengthen their child support programs and to provide access and visitation services, policies that encourage fathers to take financial responsibility for their children as well as the opportunity to provide emotional support.
Finally, the budget maintains investments in community health centers to help families access primary and preventive care regardless of their income, and provides sufficient funding to open up new health centers in underserved communities. And continued funding to implement the Affordable Care Act will help millions more uninsured or underinsured families access the care they need, promoting healthy children and more stable families.
Last but not least, the president’s budget recognizes that work supports and a strong safety net are key pillars of a strategy to help struggling Americans who fall on hard times and to provide a ladder to the middle class. To that end, his budget makes key investments in policies and programs to promote economic security and opportunity by:
- Permanently extending expansions of the Child Tax Credit and the Earned Income Tax Credit that were passed in the Recovery Act, which will boost the incomes of millions of low-wage working families with children
- Combating hunger by providing full funding for the nutritional safety net that has been responding to high levels of unemployment and by continuing investments in programs that ensure children have the nutritional building blocks they need to thrive
- Providing funding to make progress on the administration’s strategic plan to end homelessness
- Preserving existing housing vouchers that help low-income families afford rent
- Creating new housing opportunities for veterans
- Proposing financing for the development and preservation of affordable housing through the Housing Trust Fund
Cuts to the safety net
The president’s budget is not perfect, however. The package cuts and consolidates a number of important programs that serve and strengthen low-income families, which could further squeeze families already struggling to make ends meet.
For instance, the president proposes cutting more than $300 million from the Community Services Block Grant, a program that helps community action agencies in more than 1,000 localities throughout the country to provide services such as weatherization, job training, and Head Start to more than 20 million Americans.
And while the president proposes more funding than he did last year for low-income home energy assistance or LIHEAP, his blueprint would represent more than $450 million in cuts from last year’s enacted level—a hit to vulnerable households struggling to afford heating and cooling.
Cuts to affordable housing programs will also hit low-income families especially hard. The administration’s proposal requires struggling households to pay a $75 minimum rent, which would hit the lowest-income families who are already exempt from normal rents charged to Department of Housing and Urban Development recipients. These changes, coupled with small cuts to housing for people with AIDS and people with disabilities, could translate into real hardship for families on the brink of homelessness.
The right priorities
But despite these cuts, the president’s budget underscores that you can make strategic investments to rebuild the middle class even in the context of fiscal austerity. By asking the wealthiest to pay their fair share, cutting special-interest tax loopholes, and eliminating wasteful military spending, the president’s budget cuts our deficit by more than $4.3 trillion, while preserving critical investments that build our middle class and pursue additional opportunities to cut poverty.
While Half in Ten holds some concerns about cuts to the safety net, we think that overall the president’s budget underscores that poverty reduction and deficit reduction can be accomplished simultaneously.
- Obama’s Sensible Budget Priorities by Michael Linden
- Turning to Community Colleges for Middle-Class Careers by Stephen Steigleder
- President Obama’s Oil Change: Cut Tax Breaks, Invest in Jobs by Daniel J. Weiss
- Obama Steps Up for Communities of Color by Daniella Leger
- President Obama’s Budget Proposal and Bowles-Simpson by Michael Linden
- Continued Investment in Elementary and Secondary Education by Glenda Partee and Diana Epstein
- The Fiscal Year 2013 Defense Budget: A Report Card by Lawrence J. Korb, Alex Rothman, and Max Hoffman
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Senior Vice President, Poverty to Prosperity Program