Beware: Vicious Spending Caps by GOP Are Designed to Hurt—Not Help—US Economy
Over the past decade, federal spending caps limited the nation’s ability to respond to its people’s needs. The House Limit, Save, Grow Act would only make things worse.
Americans are facing problems that need solutions. We have a shortage of workers across employment sectors, and it is holding our economy back. Our children are suffering, with declining performance in school and surging emergency mental health needs. Millions of people struggle to pay for food and rent.
Over the past decade, federal spending caps limited the nation’s ability to respond to these needs. In a new analysis of 178 federal programs that serve people with low incomes, the Coalition on Human Needs found that more than two-thirds had lost ground from fiscal year 2010 to fiscal year 2023, adjusted for inflation. These included job training, education, nutrition, mental health, and housing programs. These and many more services were constrained by caps approved by Congress that were in effect from fiscal year 2012 through fiscal year 2021. These caps were far less extreme than the one recently passed by the House of Representatives, which they are insisting should be the price of preventing default. But they hurt. They made us less able than we should have been to address the problems we’re facing now.
We should be investing in meeting our people’s needs, not slashing services. And we can do that—and reduce the deficit too—if we raise revenues from the rich and profitable corporations, who have not been paying their fair share.
Take today’s worker shortage. We have job openings, but many jobs, especially those with decent pay, require skills our labor force does not have. According to the National Skills Coalition, spending on worker training has dropped by more than two-thirds over the past forty years. We spend far less than other developed nations. Over the past decade, major federal job training programs lost more than a quarter of their funding, counting inflation. If we had not let these programs erode, we could be helping more workers into good jobs now. But the House bill would make things far worse. Assuming the Departments of Defense and Veterans’ Affairs were exempt from the House bill’s cuts, everything else would have to be cut by 30%. That would cut all training programs severely, even a training program within the Department of Labor that serves homeless veterans: 5,400 fewer veterans at risk of or experiencing homelessness would receive training or related services next year, according to Office of Management and Budget Director Shalanda Young. By 2033, the House bill would result in across-the-board cuts of about 60%, further decimating job training.
This story of disinvestment is repeated in other areas, making us less prepared than we should be to address painful problems. The pandemic worsened our already urgent mental health problems for children, with emergency room treatment rising between one-quarter and nearly one-third in 2020 as compared to 2019. But federal spending in the Children’s Mental Health Services program declined by nearly one-quarter over 10 years, another victim of the old spending cap. Instead of starting to make up these losses, the House bill would require a cut of another 30% in fiscal year 2024, with cuts of nearly 60% by fiscal year 2033, again adjusted for inflation.
Proponents of the House’s extreme cuts may say that nothing in the House bill would force such cuts in vital mental health services. But the arithmetic is clear: If some programs are exempted, other services must be cut even deeper. That could mean K-12 education for low-income school districts serving 26 million children and for 7.5 million students with disabilities. The less onerous cap of the past decade resulted in cuts of 9.5% for low-income schools and reductions of between 12 and 20% for school programs for children with disabilities, according to the Coalition on Human Needs’ analysis. That has contributed to the teacher shortages in our schools today, where one in four public schools reported multiple teacher vacancies in 2022. The House-passed bill’s 30% cut would be deep enough to equal a loss of up to 150,000 teachers for low-income students and for those with disabilities in just one year. A 10-year cap reaching nearly 60% reductions by fiscal year 2033 would be even more unthinkably extreme.
Over and over, human needs programs tracked by the Coalition on Human Needs showed significant losses due to the cap imposed starting in fiscal year 2012. More than two-fifths of the programs tracked lost 20% or more of their funding over a decade, taking inflation into account. That includes a 23% cut for the Public Housing Operating Fund, which meant more affordable housing units fell into disrepair and became uninhabitable, despite our severe housing shortage. Again, the House bill ignores the consequences of cuts and caps. Applying a 30% cut to rental housing vouchers would result in over 800,000 households losing this vital form of assistance, out of more than 2 million households with vouchers now. Imposing caps through 2033 would—should—be too extreme to imagine.
That’s the trouble—Speaker Kevin McCarthy (R-Calif.) and his caucus do not want to imagine what the specific consequences of such cuts would be. They certainly don’t want us to see clearly how reckless this proposal is. But we have the experience of the last cap to show that the cuts magnify over time, and grow worse when inflation is higher.
We should be investing in meeting our people’s needs, not slashing services. And we can do that—and reduce the deficit too—if we raise revenues from the rich and profitable corporations, who have not been paying their fair share. Speaker McCarthy and his colleagues have said no to that. They are threatening default and loss of millions of jobs in order to force a massive disinvestment in our people. Solving today’s problems will require Congress and President Joe Biden to reject extreme cuts and caps. It won’t be easy.