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Hearing: Strengthening the Safety Net

Date: 
Tuesday, April 17, 2012 - 10:00am
Location: 
210 Cannon House Office Building
Strengthening the Safety Net

Opening Statements

Effort to Sugarcoat GOP budget that Shreds the Social Safety Net while Providing Gold-Plated Tax Breaks to Wealthiest Americans

Washington, DC – Today Maryland Congressman Chris Van Hollen, Ranking Member of the House Budget Committee, delivered an opening statement at the House Budget Committee hearing on "Strengthening the Safety Net.” Below are his remarks as prepared for delivery:

While today's hearing is titled "Strengthening the Safety Net,” it is mostly an effort to sugarcoat a Republican budget that shreds the social safety net while providing gold-plated tax breaks to the wealthiest Americans. It's truly Orwellian to present a budget that tears apart the social safety net as one designed to strengthen support for vulnerable Americans.

This week presents a very clear contrast in the priorities between Republicans and Democrats in Congress.  Yesterday, the Senate voted on the Buffett Rule to make sure that millionaires take greater responsibility for reducing the deficit. All but one Republican voted no and all but one Democrat voted yes.

Meanwhile, this week in the House, we're going to be doing two things. We're taking up legislation that will add billions to the deficit by providing big tax breaks to hedge fund owners, big Washington law firms, and others under the guise of a small business bill.  And here in the Budget Committee, we are holding a hearing attempting to put a compassionate face on the shredding of the social safety net.

Let's put this hearing in context. The Republican budget takes a lopsided approach to addressing our deficit. Rather than taking the balanced approach that has been recommended by bipartisan groups – an approach that requires deficit reduction through a combination of spending cuts and additional revenue – the Republican budget refuses to eliminate one single tax break for the purpose of deficit reduction. It refuses to ask the wealthiest Americans to pay one penny more for the purpose of deficit reduction. Simple math tells you that, because that revenue is taken off the table, the Republican budget hits everyone and everything else much harder.

We've talked about the impact of the Republican budget in terms of ending the Medicare guarantee. We've talked about the fact that it would slash important investments necessary to keep our economy strong, like investments in education, infrastructure, science, and research. And today we will focus on what it does to the social safety net.

The storyline that accompanies the Republican budget is a particularly cynical one. It is one designed to tell Americans that these social safety nets are not necessary because people choose those safety nets over getting a job; that most people who are out of work choose to be out of work; that most people who need the support of food and nutrition programs choose to be in that position; and that by cutting these essential supports – by making people on the economic edge even more desperate – they will be giving people the willpower to pull themselves up by their bootstraps; that they are in fact doing a favor to the people who will be most harmed.

As we consider how we can "strengthen the safety net,” we should be clear about what our goals are and how we define success.  Are we focused first on helping vulnerable Americans and what success means for their lives?  Or is our first goal to cut deficits by dismantling programs that preserve the economic well-being of the vulnerable while expanding tax breaks to the wealthiest people and corporations in America?  The answers to these questions lead to very different approaches.

If one starts with the goal of simply cutting these programs, then the Republican budget is one way to get there.  It attempts to balance the federal budget on the backs of the poor, by gutting federal spending on safety net programs and replacing it with the failed philosophy of "trickle-down” economics – arguing that somehow, if we shower the richest among us with hundreds of billions of dollars more in tax breaks, they will pass on the benefits to those at the lowest economic rungs.  The Republican budget cuts $810 billion from Medicaid.  It will be cut by 30 percent by 2022, and by an astounding 75 percent by the year 2050.

The Republican budget converts Medicaid into a block grant to states and provides inadequate funding that fails to keep pace with need.  It speaks vaguely of providing more flexibility to states, missing the point that states already have significant flexibility.  For example, 30 states operate Medicaid under one or more waivers of federal rules.

CBO concluded that the Republican budget would mean that states will need to increase their spending on these health programs, cut back services, or both. Cutbacks could involve reduced eligibility, coverage of fewer services, lower payments to providers, or increased cost-sharing by beneficiaries – all of which would reduce access to care.  An Urban Institute study of the same Medicaid plan in last year's Republican budget found that 14 million to 27 million people could lose Medicaid coverage.  Millions of poor people losing health care coverage – in a program where half of all beneficiaries are children and another quarter are either senior citizens or people with significant disabilities that make them unable to work.

I also note that concerns about work incentives that drove welfare reform in 1996 have no relevance to Medicaid.  First, it is a program that provides health care coverage to those left behind by the private insurance market.  Second, two-thirds, or 66 percent, of Medicaid spending is for senior citizens and people too disabled to work, while another 20 percent is for children.  Medicaid costs reflect underlying health sector trends and population aging, as more people need help paying for long-term care.  Spending also reflects the economy – more people rely on Medicaid when jobs are scarce.

As for SNAP, it already has strong work incentives built in.  Moreover, in 1996, rejecting proposals to block-grant SNAP (known then as food stamps) was critical to building bipartisan support for welfare reform.  SNAP continues to serve the most critical of roles in society – providing food security for families who have fallen on hard times.  It is a major stabilizer that allows the federal government to respond quickly to changes in economic conditions.  SNAP spending will decline as the economy recovers.  Attempting to force further cuts will leave millions of children without adequate diets.

The idea that the approach in the Republican budget strengthens or repairs the social safety net is the kind of doublespeak that aggravates Americans.  The plain meaning of "strengthen” is to make something stronger and more vigorous.  The Republican budget does the direct opposite: it shreds that safety net; it weakens it.  To make matters worse, it does so while expanding tax breaks for millionaires and corporations that have done exceedingly well not only by their own efforts, but because of their workers, customers, and fellow citizens.

Casey Mulligan

Professor of Economics, University of Chicago
Full text of testimony ]

Ron Haskins

Co-Director Center on Children and Families, Brookings Institute
Full text of testimony ]

Robert Rector

Senior Research Fellow, Heritage Foundation
Full text of testimony ]

Robert Greenstein

President, Center on Budget and Policy Priorities
Full text of testimony ]