“Tax cuts will make matters worse”

A new analysis of President Bush’s 2007 budget shows that Oregon would experience large and growing cuts in federal investments over the next five years, the Oregon Center for Public Policy warned today. If adopted by Congress, the President’s budget would weaken critical education and training efforts, and place significant new burdens on Oregon’s budget. The analysis released today by the Washington, DC-based Center on Budget and Policy Priorities shows state-by-state effects of the budget cuts over five years.

The Administration’s budget calls for $183 billion in cuts to domestic discretionary (non-military, non-entitlement) programs over the next five years. More than 90 percent of these cuts would take place after 2007. In a break with standard budgeting practice, the Administration did not provide funding levels in its official budget documents for specific programs for years after 2007, though it counts on cuts in 2008 – 2011 to achieve the budget’s long-term budget targets. Using data from a computer run the Administration inadvertently released, the Center on Budget and Policy Priorities was able to calculate how the budget would affect specific programs, as well as each state, over the next five years.

While Governor Kulongoski and others have already voiced concerns about the first year of budget cuts under the President’s proposal, the new five-year impacts announced today has others speaking out, as well. Oregon business and education advocates are using the occasion to call on the Oregon congressional delegation to reject the budget proposal.

Oregon Superintendent of Public Instruction Susan Castillo is among those concerned about the choices made in the President’s budget proposal. “In today’s increasingly knowledge-based global economy, a well-educated and appropriately-trained Oregon workforce is key to our state’s economic competitiveness,” stated Castillo.

“The federal share of our state education budget is crucial. The proposed reductions in overall federal resources for education and training at all levels is disturbing, especially in light of the state’s current challenges to adequately fund a solid educational system that produces the needed talent for today and tomorrow,” Castillo added.

The President’s budget is also raising concerns in the small business community. “What is most important to small businesses is the availability of an educated and trained workforce,” stated Christine Chin Ryan, Chair of Oregon Small Business for Responsible Leadership. “In order for Oregon’s small businesses to compete in today’s environment, we need to aggressively invest in a skilled workforce, not take away basic educational opportunities in our state,” she added.

The analysis released today shows that the impact on Oregon of education and workforce cuts in the proposed budget include:

• Cuts to Head Start of 10 to 14 percent. In 2011, between 900 and 1,200 fewer low-income Oregon children would enroll in this pre-school program.
• Cuts of $75 million in federal funding for K-12 education for Oregon over five years.
• Complete elimination of federal funding for Oregon’s vocational education programs.
• Seventy-four percent reduction, or $89 million, over five years in federal funding for programs that help Oregonians achieve literacy and gain marketable job skills.
• Cuts in federal childcare funding for Oregon of 9%, or $11 million over five years, limiting the ability of the state to support low-income families maintaining employment.

While the Administration’s budget calls for overall reductions in non-military domestic investments, it also proposes tax cuts that would substantially erode federal revenues. Partly as a result, despite the deep spending cuts, the budget as a whole would deepen the federal deficit by nearly $200 billion over five years.

“The tax cuts will make matters worse,” said Janet Bauer, an analyst with the Oregon Center for Public Policy. “Congress should instead produce a budget that both strengthens the competitiveness of Oregon workers and is fiscally responsible.”

The Oregon Center for Public Policy uses research and analysis to advance policies and practices that improve the economic and social opportunities of all Oregonians.