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US Senate passes budget bill slashing social programs

The US Senate finished up the final days of its session for the year by pushing through a top priority measure—a budget reconciliation bill that will cut spending in entitlement programs for students, the poor and the elderly. Once the bill is signed into law, it will mark the first cutback in entitlement spending in nearly a decade.

Vice President Dick Cheney cut short a trip to Afghanistan and the Middle East to attend the final proceedings. The vote was 51-50, with Cheney using his constitutional authority as president of the Senate to break the tie and pass the austerity measure.
The bill includes $40 billion in spending reductions over five years that come largely from major rollbacks in federally-subsidized student loans, the Medicaid health program for the poor, and welfare benefits.

The bill passed by the Senate was the product of a House-Senate conference committee, which reconciled separate bills passed by the House of Representatives and the Senate in November. The resulting bill includes most of the cuts in the original House bill. However, because the Senate version was amended slightly from the conference report, it must be voted on again by the House, either later this month or early next year, before being signed by the president.

In relation to the overall federal budget, the $40 billion over five years is minimal. It is less than one tenth of what the US government spends on the military alone every year. However, the cuts will have a major impact on some of the most vulnerable sections of the population. They are seen as an important step in the drive to undermine entitlement programs and all government spending not aimed at enriching the wealthy or expanding the military-police apparatus.

The blatant class character of government policy is highlighted by the fact that the budget bill is to be followed early next year with a tax-cutting measure worth $60 billion to $70 billion that will overwhelmingly favor big business and the wealthy.

The budget measure gives broad authority to state governments to increase co-payments for Medicaid recipients and reduce their health benefits. Among the changes are increases in out-of-pocket costs for doctor visits, prescriptions and other services.

Medicaid programs are administered at the state level, but they must follow guidelines established by the federal government. Funding for the programs is shared between the federal government and the states.

The cuts in the budget bill are estimated to reduce federal Medicaid spending by $11 billion over five years and $42 billion over ten years, but the actual reduction in services to the poor and elderly could be much greater. Many states have already begun implementing severe cuts in services and restrictions on eligibility, and Florida has gained approval from the federal government to shift to a program that essentially privatizes the provisioning of health care through Medicaid.

Because the bill allocates money to partially cover costs incurred by states that are providing Medicaid coverage to victims of Hurricane Katrina, the net cut for Medicaid amounts to $4.8 billion over five years. This is the figure that has generally been reported in the media. However, it underestimates the level of cutbacks targeted at the bulk of Medicaid recipients.

Increases in co-payments will be felt most directly by working class families earning incomes just over the federal poverty line—a threshold that grossly underestimates the actual income needed to sustain a family. An analysis by the Center on Budget and Policy Priorities (CBPP) found that, for those beneficiaries, co-payments for some services could rise from $3 to between $20 and $100 or more. States would be allowed to charge co-payments of up to 10 percent of the cost of services. This would make what is supposed to be an entitlement benefit unaffordable for many recipients.

For those who earn above 150 percent of the official federal poverty line, co-payments could be as high as 20 percent. Moreover, the CBPP notes, "For many beneficiaries with incomes below the poverty line, the legislation intends that states could increase the existing nominal co-payment charge of $3 per health care service or medication each year by the percentage increase in the medical care component of the Consumer Price Index. The medical care component of the CPI has been rising twice as fast as the general inflation rate, however, and thus at least twice as fast as poor beneficiaries' incomes."

The bill also restricts the ability of elderly people to transfer assets such as homes to family members in order to qualify for Medicaid services, including nursing home care.

About a third of the cuts, or $12.7 billion over five years, come from changes in federal student aid programs. "This is the biggest cut in the history of the federal student loan program" David Ward, president of the American Council on Education, told the New York Times.

The bill fixes the interest rate for federally-subsidized Stafford loans at 6.8 percent and sets the rate for loans to undergraduate parents (PLUS loans) at 8.5 percent. Currently, these rates are allowed to float with the market, and are as low as 4.7 percent for Stafford loans and 6.1 percent for PLUS loans, according to figures reported Thursday in the Wall Street Journal. The bill also reduces subsidies to many banks that provide loans to students.

By fixing rates at high levels, the bill eliminates the ability of students to lock in lower rates by using the Federal Consolidation Loan Program. Many students have been taking advantage of this program in recent years due to relatively lower interest rates.

The Journal notes: "When compared with today's low rates, switching to fixed rates would cost students and their parents thousands of dollars over the life of the loan... If a student consolidated a typical Stafford loan balance of $20,000 at the new rate compared with the current loan rate, he would be paying over $2,000 more in interest over a standard 10-year life of the loan. With PLUS, parents would be paying $3,000 more."

These moves come as college tuitions continue to increase far more rapidly than the rate of inflation. Last year, tuition and fees at a four-year public college or university rose more than 7 percent, while at private schools the increase was 5.9 percent. According to the Department of Education, over the past decade public college tuition has increased by an astonishing 54 percent, and private tuition by 37 percent, in real terms.

The indebtedness of college graduates has increased sharply during this period, and now averages nearly $20,000, according to some estimates. This coincides with a long-term trend of reduced grants for needy students. Students are increasingly resorting to high-interest private loans and credit cards to cover tuition and other fees.

The budget reconciliation bill does not increase the maximum funds available through the government Pell Grant program, meaning this maximum will once again decrease in real terms.

The bill enacts major changes in federal welfare policy, deepening cuts put in place in 1996 under the Clinton administration. In particular, the bill increases work requirements to qualify for Temporary Assistance to Needy Families (TANF).

The bill requires that for each state, 90 percent of all two-parent households participating in TANF must work at least 35 hours a week. States that do not meet this requirement could be fined. The measure will have the effect of encouraging states to further slash welfare rolls.

According to the CBPP, the new bill under-funds child care for working families that do not qualify for welfare. "By 2010," it reports, "an estimated 255,000 fewer children in low-income working families not receiving cash welfare assistance would receive child aid than received it in 2004."

The reconciliation bill excludes those limited measures in the original Senate version that were opposed by sections of big business. One of these proposals would have eliminated a fund to provide financial incentives to private insurers who join the new Medicare prescription drug program. The fund amounts essentially to a large cash handout to insurers. The measure was dropped after the White House threatened to veto any final bill that included it. Other proposals that would have limited Medicaid and Medicare payments to the giant pharmaceutical companies were also eliminated.

The reactionary character of the budget bill was reflected in the methods used to get it passed. In the House, the bill was pushed through in the early hours of the morning on December 19, only a few hours after it had been worked out by the House-Senate committee. The House leadership invoked a procedure known as "martial law" to evade long-standing House rules that require at least a day between the introduction of a major piece of legislation and the vote.

The assault on social programs, combined with tax cuts for the wealthy, comes at a time of deepening economic insecurity for the broad masses of the population. Many US families have begun to receive their first winter heating bills for the year, which are sharply higher from a year before. This is compounding the difficulties caused by several years of declining real wages. Record numbers are applying for emergency food aid during the winter months, and the Wall Street Journal reported on Thursday that housing affordability has hit 14-year lows.

Such an extraordinary attack on social programs can be passed under these conditions only due to the absence of any serious opposition to the economic policy being pursued by the White House and the Republican leadership in Congress. While they may posture as critics of the administration on this particular bill, the Democrats have no disagreements with the basic thrust of White House policy. As faithful representatives of the ruling elite, they have participated fully in an assault on social programs that has been ongoing for a quarter-century. No Democrat has proposed any serious measures to deal with the mounting social crisis in the United States.

The passage of the budget bill comes three-and-a-half months after Hurricane Katrina, which exposed the enormous level of social inequality in the United States. While even the Bush administration was forced to acknowledge the role of poverty in the catastrophe, Bush declaring on September 15 that his administration would "confront this poverty with bold action," the government has from the very beginning sought to use the disaster as a justification for continuing its policy of gutting social programs in favor of tax cuts for the rich.

homepage: homepage: http://www.wsws.org

Working people who vote for Republicans . . . 23.Dec.2005 11:24

g.d. dem

. . . are like chickens who vote for Colonel Sanders.

The WorldSocialistWebSite is aware of the problem, but unaware of the battle raging around it. Anti-dems like the wsws are like people who watch the war on television and follow all the talking heads about the Sunnis and the Kurds, so they are able to kibbutz real good -- but what part do they really play in the battles, whether in the U.S. or in Iraq?

The anti-dem propaganda thrown in at the end is pitiful and specious. Joe Kay knows better, but feels obliged to parrot his "party line".

Only on rare occasions does the wsws, and other more-radical-than-thou anti-dems, feel obliged to square their wholesale condemnation of Democrats with the facts.


NO Democrat in the Senate voted for these cuts in social programs! But anti-dems will still try to spin that into a story condemning "the Dems"!


"the Democrats have no disagreements with the basic thrust of White House policy."


What exactly are the "basic thrusts" of the White House if not drilling the ANWR, installing ever more regressive judges in the Federal Courts, undermining environmental protection, eliminating Social Security, cutting taxes for the upper class, and - yes - cutting social programs including education? That's what the "basic thrust" actually means, in concrete terms. AND ON ALL THOSE ISSUES THERE HAS BEEN SOLID DEMOCRATIC OPPOSITION IN THE CURRENT SESSION OF CONGRESS!


"No Democrat has proposed any serious measures to deal with the mounting social crisis in the United States."

NO Democrat has proposed ANY serious measures???

As wsws and other anti-dems never want us to forget - or forgive (?) - Dennis Kucinich IS a Democrat! What are the anti-dems saying? That Dennis is a Democrat except when that fact is inconsistent with some point that they are trying to make? Are socialists and other anti-dems exempt from the people's cry for consistency?

Some of Kucinich's serious proposals "to deal with the mounting social crisis in the United States" --

On jobs and withdrawal from WTO and NAFTA --
including specific proposals on
* Sweat Shops
* Cuban Embargo
* Jobs and Infrastructure
* H-1B and L-1 Visas
* Outsourcing Jobs

Universal Health Care

Prescription Drugs --


Medicare --


Complimentary and Alternative Medicine --


Medical Marijuana


Mental Health


Disability Rights




Workers' Rights


Corporate Power


Economic Justice


Minimum Wage


I know that I'll be told that Kucinich was the reason that Kerry was nominated in 2004. Maybe even the reason that Kerry lost the election (assuming that he did)? And all about how Clinton - a decade ago - conspired with Republican congresses to enact welfare cutbacks and "free" trade. And all the rest of the anti-dem pre-recorded droning intended to divert attention from the actual factual details of what is happening in the here and now.

The anti-dems have a script and they don't give a damn if the facts fit into their script or not. They'll spin and distort the facts to fit their psudo-Marxist mythology -- just as long as they can continue to split the progressive movement along their preconceived ideological lines.

Joe Kay must choose. Which is it to be, Joe? Will you support the progressive movement, telling the truth and the whole truth, OR will you narrowly limit your support to your SEP, at the expense of the truth?

Working people who cannot act in their own self-interest until the self-styled "revolutionary vanguard" gives their activity a seal of left-elitist approval ARE LIKE CHICKENS CAUGHT IN THE HEADLIGHTS on the road in front of the sign that says "Animal Farm"!

Thanks, but no thanks.

touche, beware all gravedigger Dems or Republicans 23.Dec.2005 15:12


People who vote for the Dems or Republicans are like chickens who vote for Colonel Sanders...

People who vote for the Dems are like chickens who think that a Democratic Col. Sanders will protect them from the Republican Col Sanders.

KERRY AND GORE AND THE WHOLE DEMOCRATIC PARTY IS USELESS. OTHERWISE, THEY WOULD HAVE REALLY FOUGHT FOR YOU. THEY LAY DOWN AND DIED. AND YOU LOVE THEM still because you think you have to love some status quo party or you will hate yourself. Well, I recommend hating yourself first over helping out one of your two gravedigger parties that are killing you regardless of who is in power!!

The handful of party elected republicans or democrats who understand the importance of the Constiution is so miniscule that it is totallly laughable.

Boycott both the Democrats and the Republicans until we celebrate their total destruuction. NONE OF THEM are in power throgh a democratic process at all.

at least 'me' has a plan 23.Dec.2005 17:01

g.d. dem

A negative plan, a plan for what NOT to do, but still it is a plan. Here it is:

"Boycott both the Democrats and the Republicans until we celebrate their total destruction."

I recommend that working people act in their own self-interest. If you see your self-interest to be boycotting the major parties, then that's the negative part of a plan, what NOT to do.

But what is your positive program? Just wait for the celebration?

Working people who cannot act in their own self-interest until the self-styled "revolutionary vanguard" gives their activity a seal of left-elitist approval ARE LIKE CHICKENS CAUGHT IN THE HEADLIGHTS out there on the road in front of the sign that says "Animal Farm"!

What, me worry? 23.Dec.2005 19:24

70 year-old

"Children jump from a ship into the water. They have fun playing there. They do not understand that the ship is leaving and that they will soon be alone in the middle of the ocean. Someone throws a rope from the ship, and people shout loudly to them that they will die if they do not take hold of the rope. But the children do not believe. It is not that they do not have enough faith in the rope. It is that they do not believe they are in danger. They do not believe the words of those who are shouting to them. Instead, they believe the children around them, who say that they will be free to swim as they like after the ship has left. They do not believe that there will come a time when their arms will be too tired to hold them up, and that they will go to the bottom. It is only because they do not believe this that they do not take the rope. This I can understand. But taking the rope is easy for people who are old enough to understand the danger that is in front of them."

--- Leo Tolstoy (from Tolstoy's "What I Believe", part 9)

 link to www.accsoft.com.au

The gist of Joe Kay’s article hits the mark 23.Dec.2005 20:57


But Joe Kay should choose his words more carefully because a reactionary dem might jump all over his ass for statements like: "No Democrat has proposed any serious measures to deal with the mounting social crisis in the United States." What Joe should have said is that 98% of the dems have not supported serious measures to deal with the mounting social crisis in the United States. The vast majority of dems in congress are worthless -- sucking at the corporate teats -- just like the republicans.

People like myself, "me", and many others, might begin to listen to these corporate mouth-pieces if the majority of them (a much higher percentage than 2%) were to reverse course and actually represent we the people.

For me personally, that would mean supporting things like: (1) IRV, Instant Runoff Voting, where a voter selects a first, second, third, etc., preference among candidates, and if there's no majority winner, the "instant runoff" is instantly recalculated.

Under proportional representation -- in use in virtually all the other democracies of the world -- the percent of the vote a party gets determines the percent of seats they have in Congress or Parliament. See  http://www.fairvote.org/pr/uses.htm

(2) making Senate Rule 28 much stronger, or totally eliminating it for something better -- like common sense and fair play. I'll say it again: if the wimp-ass dems had any balls, they would throw any bills -- attached with totally unrelated provisions -- back at the republicans. See  http://www.truthout.org/issues_05/122105EA.shtml for a recent example of this often-used, childish, and damaging tactic. The dems get upset when the republicans do it, but when given the opportunity, they do the same damn thing. And we the people lose, no matter who is doing it.

and at the same time 24.Dec.2005 08:32


another $700 million for Zionist crusaders to continue stealing Palestinian lands and to continue murdering the Palestinians who resist the continuing offenses of ZIonist crusaders. Like in 2002, when silicon valley was laying off thousands and the rest of the country hundreds of thousands, our countries whore politicians were so proud to reveal that they were sending the American's jobs to companies of the ZIonist crusader state with several multi-billion dollar contracts with Zionist high tech companies.

The Democraps and Republitrash know where thier priorities are. They have to keep what ever ZIonist are using to blackmail them in the shadows.