The Human Needs Report

The Human Needs Report

January 23, 2014

IN THIS EDITION

APPROPRIATIONS: Congress Approves Spending for FY 2014: Sequester Cuts Partly Replaced, but Many Programs Still Below Their FY 2010 Levels

UNEMPLOYMENT INSURANCE: Hope for Unemployment Insurance Extension Fades for Now

SNAP: Farm Bill with SNAP Cuts Nearing Votes

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Congress Approves Spending for FY 2014:
Sequester Cuts Partly Replaced, but Many Programs Still Below Their FY 2010 Levels

Congress returned in January to show it could reject gridlock by enacting a spending bill covering all of this year’s appropriations. The bill provides $1.012 trillion in baseline spending to divide up across defense, domestic, and international programs, $25.8 billion more than was available in FY 2013. The House passed the Consolidated Appropriations Act of 2014 on January 15, 359-67, with 166 Republicans and 193 Democrats voting in favor and 64 Republicans joined by only 3 Democrats voting no. The Senate followed the next day with a 72-26 vote in favor, with all Democrats and Independents and 17 Republicans in support, and 26 Republicans opposing. President Obama signed the omnibus bill on January 17, finalizing spending more than three months into the fiscal year.

The spending bill was notable in that it replaced many of the cuts that would have been required through sequestration and provided program-by-program spending decisions, turning away from the recent practice of simply continuing existing spending for most departments. The appropriators, led by Chairs Mikulski (D-MD) in the Senate and Rogers (R-KY) in the House, could instead set priorities based on current circumstances, although within the constraints set by budget caps.

Compared to the cuts imposed by sequestration in FY 2013, domestic spending mostly did better. For example, spending in the Departments of Labor, Health and Human Services and Education rose from $149.6 billion to $156.8 billion. However, the longer-term trajectory in these areas is down. Even without adjusting for inflation, FY 2014 spending for Labor-HHS-Education ($156.77 billion) is $6.8 billion less than funding in FY 2010. After counting inflation, spending is down roughly $20 billion over the same period. Similarly, Agriculture spending ($20.88 billion) is up $1.3 billion compared to FY 2013 (including sequestration), but down $2.4 billion from FY 2010 (or down just under $4.5 billion, counting inflation). Transportation-Housing and Urban Development ($50.86 billion) rises $2.4 billion over FY 2013, but is $17 billion less than in FY 2010 (or $23 billion less, adjusting for inflation).

Human needs programs made important gains over FY 2013 in reversing some of the harsh cuts caused by sequestration. For instance, the number of children participating in Head Start/Early Head Start declined by 57,000 last year, but in FY 2014, 90,000 children will be added, including 40,000 in Early Head Start, an increase of more than one-third. Rental housing vouchers were also significantly cut in FY 2013, both by reducing the number of vouchers available by about 50,000 and by increasing the rents of low-income tenants. According to the Center on Budget and Policy Priorities, most but probably not all of those vouchers should be able to be restored with the $19.177 billion funding approved for FY 2014. Some additional funding specifics:

Job Training: Adult Training through the Workforce Investment Act rises to $766 million, up from the post-sequester FY 2013 level of only $730.6 million. But funding is $95.4 million less it was in FY 2010 (or more than $170 million down, counting inflation). WIA Youth Training receives $820.4 million in FY 2014, about $39 million more than last year’s post-sequester level. Here too, spending is way below the FY 2010 level of $924 million. That pattern persists in other job training programs, including Youthbuild and Job Corps, both up slightly compared to FY 2013, but well below FY 2010 levels. (For more job training funding detail, see table prepared by the National Skills Coalition.)

Children’s Services: In addition to the increased numbers of children in Head Start, Senate appropriators say the $8.6 billion funding level allows a 1.3 percent cost of living increase for current grantees. The Early Head Start increase provides for new Early Head Start-Child Care Partnerships to improve the quality of programs serving children through age three. Congress also approved $250 million for new Early Childhood competitive grants for programs serving four year-olds at or below 200 percent of the poverty line. The Child Care and Development Block Grant is funded at $2.36 billion for FY 2014, up $154 million from the sequestration levels for FY 2013, and said to allow 22,000 additional children to participate. Unlike many other domestic programs, child care spending is higher than it was in FY 2010. Title I grants to low-income local school districts for K-12 education is funded at $14.4 billion, up $625 million over FY 2013 post-sequester levels, but slightly down from the FY 2010 level of $14.49 billion. Grants to states for education for children with disabilities (IDEA, Part B) is funded at $11.5 billion, which is $498 million more than the post-sequester level in FY 2013, and also above the $11.3 billion funded in FY 2010, unadjusted for inflation. The increase is estimated by Senate Democrats to fund 6,000 more special education staff nationwide.

Nutrition: Within the Department of Agriculture, Women, Infants and Children (WIC) nutrition packages receive $6.7 billion, said to be enough to fund the expected caseload in FY 2014. In addition, the Commodity Supplemental Food Program, which delivers food packages to low-income home-bound elderly, is funded at $202.68 million, which is $21 million more than FY 2013 funding and more than $31 million higher than funding in FY 2010 (unadjusted for inflation). (Note that SNAP/food stamps is a mandatory program; appropriators provided the $82.2 billion needed to carry out current policy. Changes in policy would be carried out in the farm bill; see separate article in this issue.)

Housing: In addition to restoring most of the rental housing vouchers lost last year, the extra $1 billion over sequestration levels prevents the loss of an estimated 100,000 vouchers this year. New vouchers for 10,000 homeless veterans are provided, through a program that has reduced homelessness among veterans by 24 percent since 2010. The Public Housing Operating Fund is funded at $4.4 billion, up $346 million from last year’s sequestration levels, and the Public Housing Capital Fund receives a small $98 million increase over last year’s $1.78 billion. These funding levels will not be enough to address a significant backlog of repair needs, likely leading to a reduction in the number of available units. Homelessness assistance rises to $2.105 billion, up $172 million over sequestration levels. (For a full listing of housing and homelessness funding levels, see the table prepared by the National Low Income Housing Coalition.)

Community Services: The Low Income Home Energy Assistance Program (LIHEAP) rises to $3.4 billion in FY 2014, up $169 million over last year’s funding, including the sequester cuts. Sequestration denied LIHEAP heating or cooling assistance to 300,000 households last year. Since 2010, when LIHEAP was funded at $5.1 billion, cuts have been severe. According to the National Energy Assistance Directors’ Association, the number of households served declined from 8.1 million in 2010 to 6.7 million in FY 2013, and the value of benefits declined from 52.5 percent to 44 percent of home heating costs. This winter, the cost of home heating has been projected to rise from an average $922 to $977 (such estimates were made before the especially frigid temperatures hit). The increase over sequestration levels will allow LIHEAP to restore some of last year’s cuts, but will still leave the program well behind its reach in 2010. The Community Services Block Grant, which funds community action agencies nationwide, receives $710 million, up from $700 million in FY 2010 (but well down from FY 2010 funding levels after taking inflation into account). Senior Nutrition programs are funded at $815 million, up $46 million from the FY 2013 sequestration levels, enough to restore the substantial sequestration cuts to senior meals in 2013 and to prevent another round of cuts. The Social Services Block Grant is funded at $1.7 billion, the same base funding as in FY 2013 and many previous years. However, SSBG was subject to sequestration last year (cut down to about $1.61b), and unlike many other programs, would continue to face sequestration cuts in FY 2014, likely keeping it at the same level as in FY 2013.

Defense versus Domestic and International Funding: Before the adoption of the omnibus spending bill, powerful lobbyists for the Pentagon exerted great pressure to avoid $20 billion in cuts that were scheduled to take place if sequestration had been allowed to proceed unchecked in FY 2014. In approving FY 2014 spending, Congress prevented that cut. Simply looking at regular appropriations, Defense appears to receive about the same amount of funding as in FY 2013 (including that year’s sequestration cuts). However, Congress also provides nearly $92 billion for Overseas Contingency Operations (war funding), only slightly down from previous year’s level despite a considerable reduction in overseas combat operations. Many analysts believe the war funding, outside the deficit reduction budget caps, gives the Pentagon plenty of room to avoid cuts in weapons systems and other areas that should be cut, based on either poor performance or lack of need. Domestic programs do not have any similar funding outside spending caps to tap.

(See table with spending levels by Appropriations Subcommittee below.)

(Sources: FY 2014 spending levels from Appropriations Committees conference report, January 13, 2014; FY 2013 Post-Sequester funding levels from the Bipartisan Policy Center

Hope for Unemployment Insurance Extension Fades for Now

Once again Congress has gone home for a break without addressing the critical issue of extending the federal Emergency Unemployment Compensation (EUC) program. EUC provides additional weeks of insurance when workers have exhausted their state benefits. Failure to extend the program before going home for the holiday break resulted in 1.3 million workers left without this safety net program when their EUC expired on December 28. Each week since then 72,000 additional workers are left without assistance. Contrary to some myths, these are not workers who refuse to look for work and are enjoying an easy, laid-back time. In order to receive EUC they must be actively looking for work, a daunting task when there are three job seekers for every available job.

In December, the national unemployment rate dropped to 6.7 percent from 7.0 percent in November, but jobs grew by a paltry 74,000. So, the decline in the unemployment rate is not attributable to more workers finding jobs, but rather to the drop in the workforce participation rate to 62.8 percent, the lowest rate in 35 years according to the Labor Department. Of particularly concern is the number of long-term unemployed – 37.7 percent of the unemployed have been out of work for six months or longer – the highest ever compared to times Congress has allowed EUC to expire after previous recessions. Investing in these workers who desperately need assistance to meet basic needs like housing and food is a strong anti-poverty strategy. In 2012, unemployment insurance kept 1.7 million people out of poverty, including 446,000 children, according to a report from the National Employment Law Project.

EUC has long been considered an emergency program that does not have to be paid for by other spending reductions or revenue increases. Five times under President George W. Bush, when the unemployment rate was above 6 percent, unemployment insurance was extended without pay-fors and with the support of the majority of Republicans. This time around Republicans are demanding offsetting cuts. On January 7, in what looked like a potential breakthrough, all 54 Democrats and Independents present and 6 Republicans agreed on a procedural vote to move to debate on the extension of EUC.

The maximum number of weeks of EUC had already been cut from 99 to 47. In a significant concession, Democrats agreed to cut the maximum number of weeks again from 47 to 31, with workers in states with lower unemployment rates receiving even fewer weeks of benefits. Republicans, however, soon filed and insisted on votes on amendments that were unpalatable to Democrats. One amendment would have paid for the extension of EUC by denying the Child Tax Credit to low-income children in immigrant families. These working families pay more than $13 billion in payroll taxes each year, and over 60 percent who use the refundable Child Tax Credit earn less than $25,000 per year. Another amendment would have helped pay for the extension of EUC by denying unemployment benefits to people who receive Social Security Disability Insurance, work part-time, and are now eligible for partial benefits if they become unemployed.

On January 14, Senate Majority Leader Harry Reid (D-NV) attempted to end debate on the Emergency Unemployment Compensation Extension Act, S. 1845, which provides a 3-month extension of benefits. The vote which required a 60-vote threshold failed 55-45. A second vote on an amendment extending EUC for 11 months failed 52-48.

Democrats in the Senate say they are committed to finding a way forward when they return from Congress’ one-week break. They will press for a 3-month extension without offsetting cuts. Senator Dean Heller (R-NV), who co-sponsored S. 1845 along with Senator Jack Reed (D-RI), is working with other Senate Republicans to find ways to pay for an 11-month extension of EUC. Even if the Senate is successful, the Republican-led House will present another huge hurdle to passage.

Farm Bill with SNAP Cuts Nearing Votes

The Farm Bill Conference agreement, which would reconcile the differences between the Senate- and House-passed bills and reportedly contains $8.6 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP) program, is nearing floor votes. Advocates are concerned about a cut that would result from significantly restricting the coordination of the Low Income Home Energy Assistance Program (LIHEAP) with SNAP. The provision disallowing SNAP-eligible households with only a nominal LIHEAP payment from receiving the standard deduction allowance for shelter and utilities would decrease the SNAP benefit of affected recipients by about $90 per month. The provision would lower SNAP benefits for approximately 850,000 recipients.

The SNAP program has proven to be one of the strongest anti-poverty and pro-economic growth programs assisting families and communities. In 2012, SNAP kept nearly 5 million people, including 2.2 million children, out of poverty and reduced child poverty by three percentage points. The large majority of SNAP participants are children, seniors, or people with disabilities, and nearly one million SNAP recipients are veterans. According to Moody’s Analytics and the U.S. Department of Agriculture every $1 of SNAP benefits generates approximately $1.73 to $1.79 in economic benefits, and each $1 billion in SNAP cuts eliminates 13,718 jobs.

At the end of the first session of the 113th Congress in December, House and Senate Agriculture Committee Chairs and Ranking Members, the lead Farm Bill negotiators, appeared poised to present their compromise to the Conference Committee in early January. The process, however, had reportedly stalled over the issue of dairy price supports. The impasse involved competing proposals to prevent milk prices to dairy farmers from plummeting and the cost of milk for consumers from escalating. Without a new farm bill by the end of January, provisions dealing with dairy price supports are set to revert back to those set in the 1949 farm law (PL 81-439), significantly increasing the price of milk and other dairy products. With the January deadline looming, the dairy issue seems to be resolved.

On December 12, prior to adjourning for the year, the House passed a 30-day farm bill extension (H.R. 3695) as a backstop if a new bill does not pass in January. Senate leaders have resisted passing an extension lest it be an incentive to delay action on a new farm bill. If the bill finally does make it to final passage with the SNAP cuts included, it will be the second major cut in the past few months, following a November reduction in the average value of SNAP from $1,50 to $1.40 per meal.