Bush budget cuts hit poor hardest, say campaigners

WASHINGTON - Vulnerable people who depend on the government for health care, housing and education will be badly hit by President George W Bush's fiscal 2006 budget, advocates for the poor said on Monday.

Bush's US$2.5 trillion ($3.60 trillion) budget, aimed at trimming growing federal deficits, does not include the cost of the Iraqi war or his proposal to introduce private Social Security accounts.

The budget's impact on the poor, in programmes including child care, veterans' health, and schools, could be harsh, the Center on Budget and Policy Priorities, a respected liberal think tank, said in a statement. Tax cuts played a bigger role than domestic spending in creating the deficit, it said.

"Look at child care spending," said Helen Blank of the National Women's Law Center. "It's been frozen for four years -- at a time when millions of low income women need to receive child care help so they can go to work. "

Congressional Democrats called the budget an exercise in misplaced priorities. "Budgets are not neutral documents; they are moral blueprints for the nation. When we cut Medicaid, housing, food assistance, education and other basic programmes, we certainly do wrong to the poor, our seniors and our nations children," said Massachusetts Democrat Senator Edward Kennedy.

Bush inherited a surplus when he took office in 2001 but is now facing pressure to slash record deficits.

New Health and Human Services Secretary Mike Leavitt told reporters the budget focused "on the most urgent priorities that will make the biggest difference in the health and well-being of Americans."

In one of the biggest items, spending on Medicaid, the joint federal-state Medicaid health programme for the poor, will slow by US$45 billion over a decade. Spending will grow about 7.2 per cent a year. Without any changes, the rate would have been about 7.8 per cent, health care advocates said.

However, the budget did not prescribe spending caps or radical restructuring of Medicaid, as many advocates had feared. Instead it called for unspecified steps to give states more flexibility in covering the poor.

While the budget also includes US$140 billion in new money to help cover 12 to 14 million uninsured people over a decade, much of that is in the form of tax credits which Congress has not approved in the last few years or in expansions of tax-sheltered Health Savings Accounts (HSA), which most Democrats oppose.

"They are robbing poor Peter on Medicaid so that rich Paul can buy an HSA," said one congressional Democratic aide.

The budget calls for a US$39 million increase for the controversial sexual abstinence education programmes, and a US$304 million rise in spending on community and migrant health centres, which are generally popular with both parties.

Child advocates, including the March of Dimes and the American Academy of Pediatrics, said the budget frays the "safety net for millions of children from low-income working families."

Medicaid also pays for roughly half the nation's nursing home costs.

Bush's critics said his budget for veterans' health won't keep up with inflation, and veterans will be faced with a prescription drug co-pay of US$15 instead of US$7. Food stamp spending will rise overall, but eligibility rules have been tightened.

Low-cost housing advocates also blasted the budget for housing and related programmes for poor neighbourhoods, as did the US Conference of Mayors and the National League of Cities.

"A cut of this magnitude will force communities to close youth centres, curtail neighbourhood revitalisation programmes, help fewer elderly homeowners stay in their homes, leave poor neighbourhoods without water and sewer services, and reduce or eliminate a host of other activities," said Sheila Crowley, president of the National Low Income Housing Coalition.

California Democratic Rep. George Miller said the budget is the first real cut in education in recent history.

"President Bush cuts education funding at the very time we are requiring schools, teachers and students to perform even better," said Miller, who also criticised shortfalls in funds for vocational high schools.

- REUTERS