More Cuts for the Poor

By Staff

Vol. 9, No. 1, 1987, pp. 1-2

Most attention to President Reagan's proposed 1987 budget has been placed on the overall size of the budget and the record-breaking deficits. But this budget is also important because it continues the Reagan effort to cut programs that serve the poor.

An analysis of the proposed budget by the Washington-based Center on Budget and Policy Priorities (CBPP), says that one-third of the $18.7 billion cuts would come from programs that aid poor people. The proposed Reagan budget would cut Medicaid, student financial assistance, low-income energy assistance, low-income housing, and Indian health programs most severely. In addition, the proposed budget proposes to eliminate another fourteen programs altogether including Legal Services and the Community Services Block Grant. Legal Services would be dropped immediately, Community Services funding would be phased out over four years.

"Winners" would be the departments of Defense, State, Justice, and NASA. "Losers" would be departments of Education, Housing and Urban Development, Interior, Transportation, and Agriculture.

According to the CBPP analysis, these shifts indicate a pattern in which "agencies with military-related spending generally receive sizable increases in their budget, while agencies that operate domestic programs generally receive reductions."

These cuts have come as the toll from sustained high unemployment levels leaves large numbers of Americans, particularly among unskilled or blue-collar workers, either without jobs or competing for a small number of low-paying jobs.

Typical are the experiences reported by an Auburn University researcher who studied the small Black Belt community of Benton, Ala., following the closing of a textile plant there in 1985.

The Dan River Mills cotton sheeting plant had begun operation in 1966, finding an instant work force among the poor in the area, many of them displaced from newly mechanized farming; more than three-


Page 2

fourths of the Dan River workers were black. Then, in October 1985, with less than three months warning, the company laid off 246 employees, many of whom had worked at the plant for more than ten years. The company blamed foreign competition for the shutdown.

Researcher Mike Trend's surveys report that only 24 percent of the laid-off workers found new jobs within two months. Only 46 percent had found new jobs within nine months. Of those who were employed again, 40 percent described their new jobs as temporary, and the average commuting distance was sixty miles a day.

Though Trend's figures indicate that wages paid by Dan River at Benton were generally much lower than wages paid for similar industrial jobs in non-South states, the laid-off workers who got new jobs typically took salary cuts of four to five dollars per hour.

And the workers who took the greatest salary cuts and had the hardest time finding new jobs were women and blacks. "Being white, being male and being married were all associated with an increased probability of becoming employed after the plant closing," said Trend's report.

Many of the former Dan River employees were unaware of or unable to secure meaningful assistance from so-called safety net government programs.

Cutbacks during the Reagan years were initially justified as part of a strategic effort to decrease the growth in federal spending and eventually balance the budget. During the Reagan years, the deficit has grown and the few reductions made have come disproportionately from domestic aid programs that constitute a fraction of the total budget.

This particular combination of cuts grows out of a deeper Reagan ideology about the role of government that has no real connection to budget philosophy.

That deeper ideology is revealed in another report from Washington dealing with welfare and also reviewed by the CBPP. The report, released by a special White House Task Force appointed by Reagan, maintains that federal aid to the poor does not work, that federal money now spent on the poor is inefficient (twice as much is spent as is needed), that there should be a freeze on federal programs, and that special pilot programs should be instituted at the state level to explore alternative strategies for public assistance.

The Welfare Task Force report, though prepared by persons with access to the full range of government program data, amounts to a restatement of long-standing Reagan views that federal government aid programs ought to be terminated. Significantly, it does not address the question in terms of federal deficits or show how such a cutback would aid the movement to balance the budget.

The CBPP analysis of the White House welfare report finds it insufficient. The report fails to give proper weight to domestic aid programs that do help the poor, and it "grossly overstated" the inefficiency of the current dollars spent.

The problem of helping the poor in America persists. Unemployment is consistently high, the earning power of employed persons is threatened, and there has been a "sharp increase over the past decade in poverty among children."

"What is needed," the Center on Budget and Policy Priorities says, "is leadership in developing bipartisan consensus on effective actions that we can take now."