Why some budget cuts get less attention

It's hard being poor in America. It's not just the stagnant minimum wage, which Congress failed to raise this month, or the lack of unemployment insurance benefits for many, since legislators failed last year to extend them for the long-term jobless.

Future cuts in federal aid for the poor look even worse. President Bush's budget for 2006 would reduce spending on early childhood education and child care, home energy assistance and rental assistance, and nutrition assistance to pregnant women, infants, and young children, Washington experts say.

Now, Congress is deliberating whether to punch another hole in the biggest safety net of all for those with little income - Medicaid and the related State Children's Health Insurance Program (SCHIP). Next to Social Security and Medicare, which serve all income brackets, Medicaid and SCHIP stand as Uncle Sam's biggest social program.

They support 1 in 6 Americans and cover 1 in 4 children. Among low-income children and parents, they provide health insurance for more than 38 million Americans. Medicaid is a critical source of acute and long-term care coverage for 12 million elderly and disabled individuals, including 6 million low-income beneficiaries of Medicare with medical problems not paid for by that health program.

Medicaid costs have soared in recent years. It will cost the states and the federal government about $322 billion this year, with Washington picking up $182 billion of that amount.

One factor behind the soaring cost is the rapid rise in the price of medical services. Another factor is corporate America's many cuts in healthcare provisions for their employees and their retirees. So more people have sought Medicaid help.

As a result, Medicaid has become a significant target for cutting federal spending.

In his budget for fiscal 2006, starting next October, Mr. Bush proposed to cut Medicaid spending by an estimated $20.2 billion over five years. He also called for new tax breaks for Health Savings Accounts and small businesses providing employees with health coverage, which would cost Uncle Sam $7.4 billion. As a result, the net potential savings come to $12.8 billion over five years.

Of course, Congress has the final say on the budget. But the legislature generally has an easier time cutting programs for the poor, many of whom don't vote, than it does cutting those that help the middle class or senior citizens, who do turn out on election day in large numbers.

"They [lower-income people] don't advocate on their own behalf," says Victoria Wachino, health-policy director for the Center on Budget and Policy Priorities in Washington. Nor can they afford "K Street lobbyists," who often have considerable influence on legislation, and usually are generous campaign contributors.

So, even though the poor are becoming more numerous (up more than 1 million between 2002 and 2003 to 35.9 million) and the number of those without health insurance rose 1.2 million during the same period to 45 million, the cuts to Medicaid and SCHIP face less of an obstacle in Congress than changes in Social Security or Medicare.

Nevertheless, advocates retain a glimmer of hope that cuts will be minimized. Congress is besieged by the states - as well as dozens of advocacy groups for low-income people. The states see an effort to shift Medicaid costs onto their already strained budgets.

In the Senate, there was a rebellion last week against Bush's proposed Medicaid savings. Sens. Gordon Smith (R) of Oregon and Jeff Bingaman (D) of New Mexico pushed an amendment to restore $15 billion of Medicaid spending in the budget being debated and create a nonpartisan commission to study changes in the program. It won by a vote of 52 to 48 this past Thursday.

But perils remain. The Senate and House will have to reconcile their different spending plans. The House version includes cuts similar to those proposed by the president.

Under the Bush budget plan, Medicaid spending during the next five years would grow about 7.2 percent a year. Without the cut, it will grow by 7.4 percent a year.

Though that sounds modest enough, Heather Boushey, an economist at the Center for Economic and Policy Research in Washington, says the cut would make 1.2 million children unable to access the system - partly depending on whether states can afford to make up lost federal money.

What especially goads supporters of Medicaid as we know it is that the president still advocates cutting taxes by $1.3 trillion over the next 10 years, primarily helping the well-to-do.

For instance, Max Sawicky, an economist with the liberal Economic Policy Institute, calculates that with the Bush tax cuts, federal revenues for 2005 will amount to 16.8 percent of gross domestic product. That's a level typical of the 1950s.

If the president's proposals are enacted and remain in force, Mr. Sawicky holds, federal receipts will remain so low for 50 years that even Medicare and Social Security will be endangered, let alone Medicaid.