Before the Thanksgiving recess, both the House and Senate passed budget reconciliation bills aimed at reducing mandatory spending. While both bills would reduce spending and share some other similarities, they are very different, and conferees will face difficult decisions as they hammer out the final version of the bill.
This is the first time since 1997 that Congress has used the reconciliation process to work to reduce the deficit. Understanding that this year's efforts will not immediately solve the mandatory spending problem, it is a progressive step towards regaining control of the country's unsustainable growth in mandatory spending.
The House version of the budget reconciliation bill, also know as the Deficit Reduction Act, would save $49.9 billion through 2010, trimming mandatory spending growth by just over one-half of 1 percent over the next five years. Under the House bill, mandatory spending would still increase by 38 percent.
Below is a summery of the House Deficit Reduction Act:
The reforms included in the Deficit Reduction Act result in over $11 billion in savings and were supported by the bipartisan National Governor’s Association (NGA). Under the House proposal, Medicaid will continue to grow at a rate of 7 percent (versus 7.3 percent current projected rate of growth). The Medicaid program is in crisis – it simply cannot be sustained without reform. Medicaid coverage is inadequate and the program has not been updated in over 20 years – despite countless medical advances.
Child Support Reform
The bill has absolutely no effect on child support payments getting to children and families; rather it fixes two inequities in child support administrative costs.
First, the bill will gradually reduce the federal matching rate for child support administrative costs from 66 percent to 50 percent – bringing it in line with all other major programs like Medicaid, Food Stamps, Foster Care and Adoption.
Second, states are taking advantage of the federal government by “double dipping” into federal matching funds by treating child support administrative costs as state money. While the federal government will continue to provide states with bonus money for meeting certain child support goals, this provision will end this wasteful “double-dipping.”
Food Stamp Program
The Republican Deficit Reduction package limits automatic enrollment in the Food Stamp program to those who only receive TANF cash benefits. However, those who were previously automatically enrolled in food stamps because they received other government assistance can still apply for food stamps individually. If they meet the existing financial threshold requirements for food stamps (which have not changed), then they will be re-enrolled in the program.
Under the Deficit Reduction Act, no child will lose school lunch program benefits. Children who were previously qualified for school lunch programs because of their parents’ participation in the food stamp program will still remain eligible for school lunch programs even if their parents no longer qualify for food stamps.
Under current law, non-citizens that enter the U.S. to attain permanent resident status sign an agreement that they will not become wards of the state. Under the House Deficit Reduction plan, legal immigrants may apply for food stamps when they have been in the country for 7 years. After 5 years of residence in the United States, legal immigrants who have applied for citizenship and those aged 60 years or older will remain eligible for food stamps.
As more Americans go to college and costs increase, student loan programs have grown significantly. Improvements in student loan programs will maintain and even expand benefits and services for students while translating into savings for taxpayers.
The House plan to secure the programs’ long-term future while generating about $14.5 billion in savings over the next five years. The plan reduces program waste and inefficiency and places higher education programs on a more stable financial foundation to ensure they remain viable for students today and well into the future.
Under current law, borrowers who consolidate their student loans in order to make a single monthly payment are unable to choose the interest rate that will meet their needs. Republicans are offering consolidation loan borrowers a choice of interest rates so that individual borrowers can choose the rate that will be right for them and taxpayers will have greater security about long-term program costs.
Low Income Heating Energy Assistance Program (LIHEAP)
The House version adds $1 billion (a 50 percent increase) to the Low-Income Home Energy Assistance (LIHEAP) Program to help our nation’s neediest families heat their homes this winter.