How Automatic Cuts Would Be Implemented Under Entitlement Cap Proposals The House May Consider Next Week

Publication Date: June 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Richard Kogan

Research Area: Banking and finance

Keywords: Federal budget; Economic projections; Tax code; Income diversity

Type: Report

Abstract:

Two leading bills to alter the federal budget process, H.R. 3800 and H.R. 3925, contain nearly identical entitlement cap proposals. These proposals would set a cap for each year on the total amount that may be spent on entitlement programs other than Social Security, with the cap being set well below the levels that entitlement spending would reach under current law. If Congress and the President failed to enact legislation that cut entitlements deeply enough to fit within the cap, automatic entitlement cuts would be triggered.

The entitlement cap proposals in H.R. 3800 and H.R. 3925 do not prescribe exactly how these automatic cuts would be implemented in each entitlement program but do include “special rules” prescribing how such cuts would be made in some programs. This short paper describes how the automatic cuts would be instituted in a number of programs, based on these special rules, where applicable, and on the basic structure of the entitlement programs in other cases. The programs examined here include: veterans’ disability compensation, the Social Services Block Grant (Title XX), the child care entitlement to states, vocational rehabilitation, student loans, crop insurance, Trade Adjustment Assistance, and Medicaid.