How Congress Is Supporting Inequality in Its FY 2016 Budget Proposals

The U.S. Capitol in Washington, January 2015.

Despite the fact that congressional leaders recently expressed concern regarding rising income inequality in the United States, some members of Congress continue to promote policies that would advance this economic trend. The House and Senate recently passed their budget resolutions for fiscal year 2016 and will now iron out the differences between their two proposals in order to agree on a single budget resolution. These proposals—which are similar to the Ryan budgets of years past—once again call for a repeal of the Affordable Care Act, or ACA, as well as steep cuts in funding to social safety net programs and a freeze on Pell Grant awards. These cuts would have devastating effects on low-income families and people of color, exacerbating existing gaps in health insurance coverage, income, and educational attainment and increasing current levels of inequality.

Both budgets seek to repeal the ACA, leaving millions of Americans uninsured. Since the implementation of the ACA, approximately 16 million Americans have acquired health care. There has also been a significant drop in the uninsured rate across all demographic groups, particularly among African Americans and Latinos. Since the beginning of open enrollment in 2013, uninsured rates for whites have fallen 5.3 percentage points against the baseline uninsured rate of 14.3 percent. During the same timeframe, the uninsured rate for African Americans has fallen 9.2 percentage points against a baseline of 22.4 percent, and the uninsured rate for Latinos has fallen 12.3 percentage points against a baseline of 41.8 percent. Repealing the ACA could result in a sharp increase in the number of people without health insurance and could cause health care costs to increase drastically.

The social safety net would also suffer deep cuts. The budgets call for reduced funding to the Supplemental Nutrition Assistance Program, or SNAP, formerly known as food stamps, and Medicaid. The House budget proposes converting SNAP and Medicaid into block grants known as State Flexibility Funds. This proposal is modeled after the welfare reform of the 1990s, which created the Temporary Assistance for Needy Families, or TANF, program. Unfortunately, TANF has failed to provide necessary assistance to many families, leaving them unable to make ends meet. For example, the program only provides assistance to one-third of poor families with children. Additionally, in more than half of U.S. states, less than one in five families with incomes below the federal poverty line receive TANF assistance.

These cuts and reforms have serious implications for people of color, as they represent the majority of SNAP recipients. Of Americans receiving SNAP benefits, 43 percent are white, 33 percent are African American, 19 percent are Hispanic, 2 percent are Asian and 2 percent are Native American. The same is true for Medicaid recipients: Data show that 60 percent of nonelderly recipients are people of color. Congress’ failure to increase the minimum wage has heightened the need for these programs, particularly for people of color, who are more likely to earn the minimum wage or low wages and who rely on these programs to survive.

Lastly, over the years, students of color have made great strides in improving their college enrollment and graduation rates. Despite this progress, however, their ability to access higher education is in danger. Rising tuition costs prevent low-income students and students of color from accessing postsecondary education, and the House budget proposes a freeze on the maximum Pell Grant award, which would leave many students unable to afford school. Furthermore, the House budget proposes restricting Pell Grant recipients to “those who need the most help,” leaving many Americans facing the unfortunate choice of incurring high levels of debt or forgoing higher education altogether. Sixty percent of African American undergraduate students and close to half of Latino students currently depend on Pell Grants to help pay for school.

Despite new leadership in the House and Senate budget committees, nothing has changed in Congress. Programs that provide a lifeline to low- and middle-income families and communities of color are still on the chopping block, potentially stifling these communities’ opportunities to achieve the American dream. As we continue to move toward a more diverse America—indeed, one with no clear racial or ethnic majority—it is essential to promote policies that provide upward mobility instead of policies that will continue to expand current inequalities.

Jamal Hagler is the Special Assistant for Progress 2050 at the Center for American Progress.