Those Cuts: How Deep is Deep?

By James Kelly

No one knows, though some programs are fatter than others

For state and local officials across the nation, Oct. 1 is Dday: this is when $35 billion in budget cuts passed by Congress last July go into effect. Figuring out just who will be hurt-and how badly-by the slashes remains a baffling task for many states. Congress has yet to agree on exactly how much will be trimmed from specific programs, and the Administration so far has offered only sketchy guidelines on how the funds must be spent.

One key question is just how harshly the poor will be squeezed, and once again no one knows. In defense of the budget cuts, supporters argue that many federally funded entitlement programs, which began as experiments in helping the needy, have become a burden on taxpayers, since the dramatic growth of these programs over the past few years cannot be attributed only to inflation and rising unemployment. Federal outlays for Medicaid, for example, have risen 15% annually for the past five years to keep up with ballooning health-care costs. The food-stamp program swelled from 16 million recipients in 1978 to 21.1 million in 1980, after Congress struck down the rule that people must purchase their stamps. Some officials view the cuts as a chance to pare administrative costs as well as marginally effective programs. Says Democratic State Representative Francine Panehal of Ohio: "It's a golden opportunity to get rid of programs that were worthless and prop up those that really work."

A rundown of major programs and how states are planning to cope with cuts:

Medicaid. Federal funding for health-care programs will be sliced by 3%, or $500 million, in fiscal 1982. In Missouri, officials have cut back on the number of prescriptions a person can obtain, set standard reimbursement rates for various medical operations, and refused to pay for weekend hospital admissions except in emergencies. Faced with a $51 million shortfall, Illinois is requiring welfare recipients to chip in a dollar for every doctor visit or pharmacy order. Explains Budget Director Robert Mandeville: "This will cause folks to think twice." 1982, this program will be cut by $1.1 billion. Nearly all states will be forced to either clip or eliminate completely the benefits for 7% of all recipients. Some states are seeking ways to make up the shortfall by cutting overhead; officials of the Pennsylvania department of public welfare, for instance, discovered that the new, simplified regulations will allow them to get rid of a computer-run management system. Estimated saving: $4.3 million. Many officials, however, find it cruelly ironic that the new AFDC regulations of the pro-family Reagan Administration discourage marriage. Under the new regulations, for example, a poor man who marries a poor woman with children will forfeit nearly all benefits. Says California Assemblywoman Maxine Waters: "I'm telling anyone who will listen that there's no point in getting married if you're both poor and have kids."

Food Stamps. With this program's 1982 budget of $12.9 billion snipped by $1.6 billion, some 1 million out of 22.5 million recipients will lose their stamps. Most states will make no attempt to cover the shortfall from local funds. Michigan officials, for example, expect to pare 16,000 from its food-stamp line of 396,000 households, while New York City may shave 68,000 from its roll of 1.1 million.

Comprehensive Employment and Training Act. Though this program must abolish its 300,000 public service jobs by the end of this month, the Labor Department estimates that some 50% of CETA-funded workers have already found other jobs, most with state and local governments. New York City, for example, will shift about 6,000 of its 9,000 employees to the city payroll, at a cost of $78 million.

School Lunches. By cutting the number of students eligible for free and reduced-price lunches, Congress carved about $1.5 billion from this program's $4.7 billion budget. School districts are thus faced with the choice of either hiking prices or slimming down portions; many have already doubled the charge for reduced-price meals to 400. To help cafeterias cope, the Department of Agriculture cooked up new nutritional guidelines that would provide schoolchildren, for example, with 6 oz. of milk instead of 8 oz., and, absurdly, would allow schools to consider ketchup and relish as vegetables.

Already faced with severe cash shortages, the states are less sanguine about being able to absorb a second round of cuts in social services. All but unanimously, officials argue that the slashes will remove the safety net from many whom the President would accept as being "truly needy." Admits Illinois' Mandeville:

"We're getting to the point now that it will begin to hurt."

--By James Kelly. Reported by Jeanne Saddler/Washington, with other U.S. bureaus

With reporting by Jeanne Saddler

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