For Immediate Release
Wednesday, February 11, 2004
Statement by AFSCME President Gerald W. McEntee on President Bush's Proposed 2005 Budget
President Bush's proposed (FY) 2005 budget is a "Budget of Mass Destruction" that will hurt working families, create record-shattering deficits, force cuts in essential domestic programs and jeopardize Social Security.
This budget proposal is another Bush administration scam to divert workers' hard earned dollars away from the public services they depend on and into the bank accounts of large corporations and the ultra-rich.
When George Bush took office, our nation had an historic $5.6 trillion dollar surplus. In just three years, the Bush Administration has squandered our surplus, and turned it into a $4.8 trillion deficit. That's not just irresponsible. It is immoral!
The President's budget will not create jobs, help state and local governments, or improve the health, education and retirement security of most Americans. Instead, it continues the Bush Administration's practice of catering to large corporations and the wealthy, while ignoring the needs of working Americans.
The President's budget would lock in tax cuts for the ultra-wealthy and corporations to the tune of $2.2 trillion over the next decade. Millionaires would receive an average annual tax cut of $107,000.
Despite all of the President's talk about homeland security, he has cut funding for firefighters and other first responders. The budget also cuts other vital domestic programs including education, veterans' health care, environmental protection, Medicaid payments to the states, worker safety, job training and air traffic safety.
And in another direct hit to states and localities, the Bush budget reduces grants to state and local governments. President Bush says his budget holds down spending but what it really does is pass the cost of government to the states. This comes at a time when states already face about $40 billion in deficits — following budget deficits of nearly $200 billion over the past three years — and puts vital public services in further jeopardy.
A president that recklessly panders to his fat-cat friends does not belong in the peoples' White House. AFSCME's 1.4 million members stand together in opposition to this budget and will fight together to vote George Bush out of office in November, and take back America.
President Bush's Proposed Fiscal Year 2005 Budget Is A Disaster for AFSCME Workers and Our States and Cities
President Bush's "Budget of Mass Destruction" Creates Record Deficits, Attacks Government at All Levels and Sends the Country in the Wrong Direction
President Bush's proposed Fiscal Year (FY) 2005 budget continues the failed economic policies that this Administration has been responsible for, calls for more tax cuts for the wealthy and big corporations, jeopardizes Social Security, makes deep cuts in domestic programs, and puts an additional strain on state and local governments.
Highlights
- President Bush has created the largest budget deficits in the history of the nation. The President has turned a $5.6 trillion surplus when he took office into a $4. 8 trillion deficit-a swing of $10 trillion in just three years. The new Bush budget calls for further increases and is expected to bring the federal budget deficit to a record $521 billion deficit in FY 2004. The President says his plan will cut the deficit in half by 2007, but in reality it is an unrealistic budget that allows the deficit to continue to grow in the future to pay for tax cuts for the wealthy and big corporations. In fact, the budget omits any new spending for Iraq and Afghanistan, threatens Social Security and makes it next to impossible to fully fund the recently passed Medicare prescription drug plan.
- The Bush Administration's tax and economic policies have been an unqualified failure, and this budget adds to these failures. George W. Bush has mismanaged the national economy, miring the federal government as well as state and local governments in a sea of red ink and fiscal distress, and he has been responsible for the worst job loss record since President Herbert Hoover, with more than 2.3 million lost jobs so far. Unemployment continues to hover around an unacceptable rate of six percent and millions more have either stopped looking for work or are about to lose their unemployment benefits. Missing from the Bush budget is any plan to create jobs, help state and local governments, and improve the health, retirement, and education security of average Americans. Instead, it continues to give large corporations and the ultra-rich a free ride.
- The Bush budget represents more of the same: more tax cuts for the ultra-wealthy and corporations. Making the previously approved Bush tax cuts permanent is the central focus of this budget and the cost of doing so would be $2.2 trillion over 10 years. The long-term cost of making these cuts permanent is more than three times the size of the Social Security shortfall. Making the tax cuts permanent would overwhelmingly benefit the ultra-rich, those with earning of more than $300,000 and above. Millionaires would receive average annual tax cuts of $107,000, while middle-class Americans would get an average cut of just $655. On the other hand, a partial rollback of the President's tax cuts, preserving the true middle-class cuts — those that convey at least some benefit to 77 percent of taxpayers would reduce this year's deficit by about $180 billion.
- The Bush budget increases defense spending and by design puts extraordinary pressure on Congress to cut domestic spending and just to get things started he proposes to eliminate 65 programs, including 38 education-related programs. While overall spending increases slightly for a few targeted programs, many vital domestic programs and services would be cut, including law enforcement, first responder grants, Medicaid payments to the states, low-income housing, job training, employment service, education, environmental protection, veterans health, energy efficiency, food safety, air traffic safety, and election reform assistance to the states. This budget also calls for even deeper domestic cuts in future years and according to the President's Office of Management and Budget (OMB), by 2009, funding for many domestic programs would be cut $50 billion below the 2004 level, adjusted for inflation. At the same time, the Bush budget increases defense spending by seven percent and that is before an additional $50 billion to continue the war in Afghanistan is included.
- The Bush budget hurts state and local governments at a time when they are still suffering major fiscal problems. President Bush says his budget holds down spending but what it really does is pass the cost of government to the states. This comes at a time when states already face about $40 billion in deficits in FY 2005. But the Bush budget makes matters worse. Funding for grants to state and local governments for all programs other than Medicaid would decline by $6 billion, or 3.5 percent, from FY 2004 levels, after adjusting for inflation and population growth. States would continue to lose revenues from federal tax cuts.
I. BIGGER DEFICITS AND MORE TAX CUTS
Tax Cuts Transforms Record Surpluses Into Record Deficits
President Bush is responsible for the largest one-year deficit in American history — $521 billion — and signals the returns to troubling long-term federal budget deficits. When President Bush took office in January 2001, the one-year budget surplus was $236 billion and the 10-year surplus was $5.6 trillion. In just three years, President Bush's economic policies "lost" $10 trillion and in a stunning reversal, replaced growing, record surpluses with a 10-year deficit of $4.8 trillion. The Bush budget proposes deficit spending at $1 million per minute. It by design reduces investments in many education, health, job training, and related vital public services and proposes permanent tax cuts that mostly benefit America's richest individuals. Ironically, the Bush budget claims to cut the deficit in half within five years, but even that claim is false, since he relies on budget gimmicks, false assumptions and the omission of major new spending for defense and the war on terrorism.
More Tax Cuts For The Rich And Special Interests
President Bush wants to make his prior tax cuts permanent, which will cost over $2.2 trillion over the next 10 years. The Center on Budget and Policy Priorities reports that tax cuts are responsible for three-fourths of the shift from surplus to deficits since President Bush took office. President Bush wants to extend through 2010, several popular tax cuts set to expire at the end of the year, including so-called marriage penalty relief, the $1,000 child tax credit, and the new 10 percent tax bracket for low-income taxpayers. In addition, the President wants an extension of those tax breaks for upper-income individuals and corporations, including the cut in the capital gains tax rate that investors pay on stock earnings, business expensing provisions, and permanent repeal of the estate tax, which comprise the bulk of the overall cost of the cuts. In addition, President Bush wants to pass a new Retirement Savings Account (RSA) plan to allow the wealthy to further shelter from taxes their savings and a new retirement consolidation plan called Employer Retirement Savings Accounts (ERSA), which would begin to erode traditional employer-sponsored defined benefit plans. Paying for these new tax cuts on top of those already approved will mean further diversion of resources for making investments that would create jobs, strengthen schools, and improve health care in order to pay for expensive tax cuts for the wealthy and big corporations.
Social Security Threatened by Large Budget Deficits
The Bush budget will divert every penny of the Social Security surplus — $2.4 trillion over 10 years (2005-2014) — in order to make the actual size of the federal budget deficit look smaller, thereby increasing the risk to retiring baby boomers. In 2014, an estimated 48 million Americans are expected to receive Social Security benefits.
Cuts in Federal Funding to the States
The Bush Administration's proposed budget not only calls for cuts in funding for grants to state and local governments for all programs other than Medicaid, which would decline by $6 billion, or 3.5 percent, but it also cuts numerous programs: health agencies, pollution control, conservation, mass transit and many others that affect the well being of our communities. It would also cut almost $28 billion in specific grants to state and local governments, further aggravating recent state and local crises. State and local governments could lose an estimated $27.7 billion if this budget passes Congress.
II. JOBS AND TRAINING
At a time of continuing major dislocations in the economy and virtually no job creation, the Administration's budget shows a callous disregard for workers and their families. The Bush FY 2005 budget eliminates or cuts many existing employment and training programs while proposing new initiatives that support such administration priorities as providing funds to faith-based institutions to provide federally-funded employment and training activities.
No Extended Unemployment Benefits
Despite continued record levels of long-term unemployment, the Administration does not ask Congress for a six-month extension of the Temporary Extended Unemployment Compensation Program (TEUC). Before it expired at the end of December, the TEUC program provided 13 weeks of federal extended benefits to workers who exhausted their 26 weeks of state benefits without finding work. A record high 375,000 unemployed workers exhausted their unemployment insurance benefits in January, and nearly two million are expected to be in this situation during the first six months of 2004. In addition, the budget proposes to make it harder for states to receive additional funds from the Federal Unemployment Trust Fund to expand their operations when more workers than anticipated file for unemployment benefits.
Elimination of the Employment Service
The budget again anticipates that legislation renewing the Workforce Investment Act will block grant the Employment Service, with the adult and dislocated worker training programs and cut total funding by $150 million. The proposal would replace the Employment Service with a patchwork of for-profit and non-profit organizations that would undermine public accountability and end the nation's public labor exchange.
Employment and Job Training Funding Cuts
Until a block grant is approved, the budget proposes a crippling $91 million cut in the Employment Service and a $65 million cut in the dislocated worker-training program. In addition, it proposes ending the migrant and seasonal farmworker program and cuts out $100 million available to train American workers so employers don't have to turn to workers from other countries.
III. HEALTH PROGRAMS
Medicaid Program Cuts — States Will Be Hurt
State Medicaid funding would be cut by $1.5 billion in FY 2005 and by nearly $10 billion over five years. The President's budget eliminates the Medicaid "upper payment limit" (UPL) program, putting the 29 states that have active UPL programs at great risk, including California, Illinois, Pennsylvania and New York. The UPL is an added Medicaid reimbursement for high volume states that serve high-risk populations.
Public Health
The deterioration in the nation's public health infrastructure came to light following the September 11 attacks and subsequent anthrax scares. Recognizing that state and local public health systems were unable to effectively deal with non terrorist-related public health threats, much less possible terrorist-related events, Congress forced the Administration to increase funding for public health and specifically for bioterrorism preparedness. While the FY 2005 budget includes grants for bioterrorism preparedness to state and local governments and hospitals, the amount of funding is set to fall by $144 million overall, compared to FY 2004 spending.
Community Access Program (CAP) Slashed
The Bush Budget slashes funding for the Community Access Program for the uninsured by 90 percent, cutting it from $104 million to $10 million. This program coordinates health care services for the uninsured offered by community providers, such as public hospitals, community health centers and disproportionate share hospitals.
IV. SOCIAL SERVICES
Child Care
The President's budget contains no increases for child care subsidies for low-income families. According to the Children's Defense Fund, flat level funding for the Child Care Development Block Grant would mean that at least 200,000 additional children would lose access to affordable child care — on top of the 100,000 children denied child care last year. The President's budget also flat funds the Child Care Entitlement program. Researchers report that only one in seven eligible children receive subsidized child care today. Additional pressure will be put on the child care system if congressional welfare reauthorization proposals pass which would require more low-income parents to go to work for longer hours.
Temporary Assistance for Needy Families
President Bush's proposed budget freezes annual funding for the basic Temporary Assistance for Needy Families (TANF) grant program at the 2004 enacted level of $16.6 billion. The President's budget proposes to create the untested and unproven "family formation and healthy marriage" initiative funded at $1.2 billion over five years, a substantial increase over the Administration's TANF reauthorization proposal. This money would be better spent on child care, job creation, intensive case management and other TANF-related programs and services that are proven to help families achieve self-sufficiency. TANF, which expired in 2002, has been funded on a temporary basis since then and is slated for reauthorization in the current Congress.
Faith-Based Providers Continue to Gain
While the President's budget slashes and burns spending for government-run programs and services, it increases the public funds funneled to religious organizations that seek to become social services providers. In the U.S. Department of Health and Human Services' Administration for Children and Families budget alone, faith-based initiatives would receive an additional $62 million over last year's budget. The budget would more than double spending to $100 million for the Compassion Capital Fund (which funds intermediary organizations to provide technical assistance to faith-based organizations to help them access government funding), provide $50 for mentoring children of prisoners, and include new money for religious maternity group homes. The budget also includes $50 million for 75 competitive grants to faith-based and community organizations to promote "responsible fatherhood."
Child Welfare
The Bush Administration's budget request contains a legislative proposal that would allow states to convert their foster care entitlement programs into capped-funding block grants, without allocating additional funds to the program. A state electing this option would receive an annual grant during a five-year period. States would not be allowed to receive additional federal funds even if their foster care costs increase more than anticipated. The Child Welfare League of America projects that states would start to lose foster care funds beginning in 2007 under this plan. Entitlement funding for Promoting Safe and Stable Families is frozen at the FY 2004 level. The Administration's budget contains very small increases for discretionary child protection programs, including the Community-Based Child Abuse Prevention program and the Child Abuse State Grant program.
Child Nutrition
The President's budget anticipates that the child nutrition programs will be reauthorized in 2004, but contains no new funds to expand program access. This means that the school breakfast and lunch, child care food, summer food and after school food programs will serve fewer children when inflation is factored in. This is the second year in a row that the President has proposed no increases for these programs. The budget requests a modest $198 million increase in budget authority for the Women, Infant and Children (WIC) program.
Food Stamps
The budget contains a Food Stamp program reserve of $3 billion as a cushion for the expected 1.2 million increase in the number of recipients. It also assumes a goal of reducing the average payment error rate in the Food Stamp program to 7.4 percent for 2005 (compared with a 8.3 percent error rate in 2002). Because working families' incomes fluxuate and could result in more Food Stamps calculations errors, this change could result in programs failing to serve some poor working families.
Social Services Block Grant
The President's budget once again flat funds the Social Services Block Grant (SSBG) at $1.7 billion. The SSBG funds a wide variety of social services programs and services that AFSCME members provide, including child welfare, child care, employment services, case management, adult protective services, and health support services. The SSBG's value has been eroding for years, which should serve as a cautionary tale about the perils of converting key domestic programs into block grants.
Social Security Privatization
The Bush budget advocates allowing younger workers to redirect a portion of their Social Security payroll taxes into individual private investment accounts. This is a first step toward privatizing Social Security, which would cost an estimated $1 trillion in transition costs. The Bush budget does not provide the funds for this transition.
V. OTHER PROGRAMATIC SPENDING CUTS
Homeland Security
The Office for Domestic Preparedness (ODP) within the Homeland Security Department provides state and local governments with grants, training, exercises and technical assistance. The FY 2005 budget for ODP is slated for substantial cuts compared to spending in the current year. The net effect of the budget is a reduction of over $420 million in aid to state and local governments for domestic preparedness. The budget also cuts $800 million in grants to first responders.
President Bush Shortchanges Education for the Third Year in a Row
President Bush's budget calls for a meager three percent overall increase ($1.7 billion) in education funding for 2005 over last year, with some programs getting additional funding but many more being cut or eliminated. In all, some 38 education programs are slated for elimination, reducing the federal investment in education by $1.4 billion. President Bush shortchanges his own No Child Left Behind Act (NCLB) that imposed new standards for school improvement by $9.4 billion this year, and by $26.5 billion since the law was enacted. The Bush budget also freezes or cuts college aid programs, levies new taxes on students, and forces students to pay more for college. It freezes Pell Grants, Work-study and Supplemental Educational Opportunity Grants (SEOG), and forces lenders to tax student loans. The Bush budget shuts out nearly 1.3 million school-aged children by freezing funding for after-school programs. The budget also fails to include any new money for school maintenance and construction despite overwhelming needs. New funding is provided for private school vouchers and the Individuals with Disabilities Education Act (IDEA) is increased by $1 million.
Head Start
The Bush budget proposed an increase of $169 million, which includes $45 million to support state implementation of a demonstration authority to promote better coordination of existing programs. This increase is less than the rate of inflation and will not permit the program to serve additional children or provide funds for teacher training or professional development.
Justice Programs
The Bush budget cuts juvenile justice and delinquency prevention programs by more than 40 percent, from $308 million to $180 million. This reflects a cut of more than two-thirds from FY 2002. Compounding the effect of these cuts on juvenile crime reduction efforts is the total elimination of the Juvenile Accountability Block Grant (JABG) funding that supports a cost-effective program shown to reduce rates of re-arrest of juveniles by up to 70 percent. JABG received $60 million in FY 2004 — a significant reduction from the $190 million that Congress appropriated in FY 2003 and the $250 million appropriated in FY 2002 and FY 2001.
The budget also cuts $700 million in funding for the COPS program, a Clinton Administration initiative putting 100,000 new police officers on the streets. President Bush proposes $44 million for COPS in FY 2005, down from $742 million appropriated in 2004.
A handful of other grant programs would be zeroed out completely, including the Byrne grants used by local police departments and the State Criminal Alien Assistance Program that assists state and local governments with the cost of jailing illegal immigrants.
Public Housing
The Public Housing Operating Fund is cut by $21 million dollars, the Public Housing Capital Fund is cut by $500 million and the HOPE IV program for severely distressed public housing is eliminated. HOPE IV was proposed for elimination in last year's Bush budget but was given $150 million by Congress. The Community Development Block Grant (CDBG) program which provides crucial funding to our nation's cities is cut by $316 million. In addition, the Bush budget is very critical of the CDBG program saying that the program "suffers from unclear purpose, loose targeting requirements and lack of results." The budget provides for a $10 million "Development Pilot Program" to test better ways to coordinate and target the funds.
Bush Budget Jeopardizes Worker Safety Programs
The Bush budget makes drastic cuts in safety, training and outreach programs for workers and freezes spending for important standard setting and enforcement. The President proposes to cut worker safety training programs by $7.1 million or 65 percent. These badly needed funds will be given to employers to create substitute assistance programs. The Bush budget provides $125.2 million for such employer compliance programs while providing only $4 million for programs to provide outreach to workers.
Environment Protection Assaulted
By cutting the environmental budget by 7.2 percent, President Bush continues his ongoing assault on the environment. Since taking office, President Bush's policies and budget proposals have rolled back safeguards that protect our drinking water, air quality, public lands and public health. His environmental policies and deep budget cuts have resulted in the federal government providing fewer dollars to state governments for important state environmental, and environmental infrastructure programs.
The President's new FY 2005 budget reduces the Clean Water State Revolving Fund, which helps states build and improve their sewer systems by $450 million. Overall spending is reduced by 37 percent and funding for clean air and global climate change programs is cut by three percent. While making these cuts in environmental spending, the Administration is pushing an unbalanced energy policy that favors business interests over public health. And instead of making industries that pollute financially liable for cleaning up, the Bush Administration is attempting to stick the American people with the enormous financial responsibility of cleaning up polluted sites.
Bush Administration Continues Assault on Transportation Workers and Their Unions
President Bush's FY 2005 budget proposal slashes transportation spending below the level that the Administration requested in its own transportation reauthorization plan offered just a year ago. The Administration transportation request of $256 billion for highway and transit will result in a missed opportunity to put Americans back to work and rebuild the nation's transportation infrastructure. Under the President's transportation proposal, 5.6 million fewer workers will find transportation-related jobs. The Administration's policy proposals will result in the slashing of thousands of jobs and the need for state governments to spend more of their own resources in order to provide sufficient transportation services, repair our crumbling roads and bridges and eliminate the growing congestion problems.
Federal Aviation Administration Programs
President Bush claims his budget will "improve aviation safety" but it actually cuts Federal Aviation Administration (FAA) funding by five percent, threatening many programs that support much needed air traffic control system modernization. The budget cuts capital spending by $400 million, and it cuts the Facilities and Equipment budget, which funds safety and security upgrades and repairs at airports. No new money is added for more controllers despite projected shortages. In addition, the FAA announced they will start to unilaterally impose contracts on all of their employee unions — having failed to reach agreement through collective bargaining.
Election Reform Assistance
President Bush's budget proposes only $40 million for grants to state and local governments for FY 2005 — about five percent of the amount Congress would have to provide this year to fully fund election reform efforts.
Federal Pay Raise Reduced
The President's budget for 2005 recommends a base pay increase of 1.5 percent. But the budget also signals that the Bush Administration wants the government to change how it looks at pay. It calls for the implementation of a new "pay for performance" program, which he says will reward those government employees who are "working real hard" and deserve that extra reflection in their paycheck for good performance. Once again, President Bush does not recommend pay parity between civilian and military employees. His budget recommends a 3.5 percent raise for military personnel.
Prepared by the AFSCME Legislation Department
