The fiscal 2011 budget deal negotiated between the White House and House and Senate leaders is not as devastating to the concerns of the middle class and the poor as H.R. 1, the 2011 budget recently passed by House Republicans—but that is not saying much.
With this budget deal, two fundamental problems remain. First, low- and middle-income households are being asked to bear the brunt of the burden for deficit reduction, while people at the top of the income scale and corporations have not been asked to sacrifice anything of consequence. Second, investments we need to make as a nation to build a new foundation for broad middle-class prosperity are being shortchanged. We will pay the price in the form of fewer jobs, stagnant communities and continued slippage in such areas as transportation and renewable energy.
Here are some details about the 2011 budget deal that should be of particular interest to middle-class people: (For more details about the budget resolution, H.R. 1473, see the documents produced by the House and Senate appropriations committees.)
Food and nutrition programs — The WIC (Women, Infants and Children) food supplement program would be cut $504 million below 2010 levels under this proposal. House Republicans argue this will serve 9 million families. There were nearly 8.9 million households receiving WIC benefits at the end of 2010, according to the Department of Agriculture.The proposed funding would therefore not make it possible to extend benefits to the estimated 43 percent of women and children who are eligible for benefits but aren't receiving them.
Health — The budget cuts more than $1 billion from HIV and sexually transmitted disease prevention programs, even though in the late 2000s infection rates of most of these diseases, including HIV, were continuing to inch upward, according to Centers for Disease Control data. Health care services provided by Planned Parenthood would also be cut by $17 million, although conservative Republicans did not achieve their stated goal of eliminating Planned Parenthood funding altogether.
Education and Training — One key change eliminates additional Pell Grant funding for summer school classes for college students already receiving aid for their regular classes. But the maximum Pell Grant award will remain at $4,860. The proposal also saves some job training programs that would have been cut under H.R. 1, but still cuts $182 million from a program that funded state job training grants for adults, youth and dislocated workers.
Energy — A cut of $438 million in energy efficiency and renewable energy program funding is one of several program cuts that mark a setback for households seeking an accelerated adoption of green energy and conservation measures in their homes or opportunities to work in the green energy industries of the future. Lower-income households, meanwhile, will also be affected by a $390 million cut in low-income heating assistance contingency funding.
Transportation — At a time when public transportation systems are already struggling under the weight of increased demand, frozen or declining state and local subsidies and higher fuel costs, they would also have to contend with a $991 million cut in federal funding for capital improvements, such as new buses or rail cars. New funding for high-speed rail projects would be eliminated (as well as the estimated one million jobs that those projects would have produced) and highway funding would be frozen at 2010 levels. That's bad news for the commutes of working people.
Community Development — Community development funding is slashed by $942 million, and a number of smaller programs are also being cut that channel federal funds into local projects that improve neighborhoods, either by providing affordable housing in good condition, cleaning up environmental hazards or supporting local public safety efforts through the COPS policing program in the Justice Department.
Environment — Environmental Protection Agency funding would be cut 16 percent, or $1.6 billion. That cut will hobble efforts by the agency to protect communities from air and water pollution, curtail land conservation efforts and limit research into climate change.
Missing from this budget proposal are moves to close corporate tax loopholes or to eliminate many of the forms of corporate welfare that, if they were made a part of this budget, would make many of these cuts unnecessary and would actually make a greater contribution to closing the federal deficit. A recent report by the Institute for Policy Studies outlined five tax changes that if implemented would yield $4 trillion over the next decade that could be used for deficit reduction and for strategic spending on programs that would preserve our safety net and jump-start economic growth. Those would include creating higher tax brackets for millionaires, establishing a graduated estate tax on multimillion-dollar estates, closing corporate tax havens, leveling a tax on stock and options trades, and taxing capital gains and dividend income at the same rate as wage income.
A budget proposal based on "shared sacrifice" would have demanded something from the 2 percent of Americans who have received the overwhelming share of the economic growth of the past decade, and who bounced back handsomely from the recession. In that respect, this budget fails the fairness test. In cutting programs that would support job creation and economic recovery in the communities that have yet to rebound from the recession, this budget fails the test of adequately supporting the emergence of a new economy for middle-class breadwinners. In protecting the economically vulnerable and ensuring that they have a ladder back upward into economic prosperity, this budget courts failure.
While we are not yet giving this budget proposal a "thumbs down," in no measure can this budget deal be considered a good one for the middle class.