Bush’s Proposed Budget Could Hit Charities Hard

The federal budget President Bush has proposed for 2007 marks another step in his long-range effort to shrink government spending and could result in significant cuts to the federal

programs on which many charities rely, according to budget experts and nonprofit scholars.

Reductions in spending began in earnest last year, they say, and seem likely to deepen this year. Lawmakers are increasingly challenged by budget pressures and may be less supportive of programs they have traditionally favored.

The $2.8-trillion budget proposal that Mr. Bush sent to Congress this month would seek to stimulate charitable giving through an array of tax incentives, but it would also cut many federal programs of interest to nonprofit organizations. The president’s request covers spending in the 2007 fiscal year, which begins October 1.

Mr. Bush singled out 141 programs for elimination or steep cuts, a move he said would save the government nearly $15-billion.

Among the programs that would be eliminated under the president’s plan are those that subsidize vocational, arts, and technology education, as well as a program that provides meals to roughly 400,000 needy elderly people. The White House would consolidate several programs to improve rundown neighborhoods into the Community Development Block Grant program, and reduce funds for that program. The administration also seeks to reduce the amount that hospitals receive from the Medicare program for the elderly.

Mr. Bush said such changes were needed to make money available for the government’s fight against terrorism and to hold down the growth of the federal deficit, which is projected this year to reach $423-billion. Many of the programs are wasteful or duplicate other government efforts, he said.

In the past, charities benefited from the opposition of Congress to many of administration’s suggested cuts. But budget experts say the political landscape has changed in recent years as Congress sets limits on its own spending, as it did in 2005 and 2004.

Such limits have resulted in across-the-board cuts in federal programs, according to Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a Washington research group that studies the impact of fiscal policies. And they have put increasing pressure on programs that lack strong advocates. Last year lawmakers shrank or abolished 89 of the 154 programs that Mr. Bush had proposed for reduction or elimination.

Lawmakers will decide in the coming months whether to approve a federal budget that goes along with the president’s overall plan to reduce most government spending again this year. If they impose strict spending limits again, as they have in recent years, any funds they restore to programs that Mr. Bush would have cut will have to be offset by reductions in other areas, Mr. Greenstein said. That means many organizations are likely to end up with less federal money in the coming year, he said.

“The overall size of the pie is significantly too small,” he said.

Cuts in 2007 would follow reductions in spending made in previous years. Alan J. Abramson, director of the nonprofit-research program at the Aspen Institute, a Washington think tank, said federal programs of interest to charities were cut by $1-billion this year, a 3-percent reduction. And more cuts are likely in the coming years until the deficit is reduced, he predicted: “It’s tough news for a lot of charities and the people they serve.”

But charities should not be too worried about the proposed cuts, according to Brian M. Riedl, a senior budget analyst at the Heritage Foundation, a conservative Washington think tank. Federal spending on many programs that nonprofit groups use to provide services, such as money for health care and housing for the poor, has grown since Mr. Bush took office, he said. “Rather than focus on year-to-year growth, these organizations should be ecstatic that most programs’ funding is so much higher than it was just five years ago,” he said.

Not all charities would see cuts in federal support under the president’s plan. Mr. Bush sought increases in spending on some health-care programs. He requested $4-billion for a global program to fight HIV/AIDS, $740-million more than last year. And he has proposed a new $100-million program that would provide students with vouchers to attend private schools or receive tutoring.

Among items in the budget of particular interest to charities:

Arts and humanities. President Bush proposed that most arts organizations, including the National Endowment for the Arts and the National Endowment for the Humanities, get the same amount of money they did last year.

Education. Mr. Bush sought the same amount of funds as last year for Head Start, the preschool program for needy children. Because the costs to provide services are rising, advocates say that 19,000 children would need to be cut from the program’s rolls as a result. The vocational-education program would be eliminated, as would a group of grant programs that aim to help minority students attend college. One increase: Funds to provide educational help for children with disabilities would grow to $10.7-billion, an increase of $100-million, or 1 percent, over current spending.

Health. The administration’s proposal would increase grants for local health centers by $181-million — to $2-billion — to pay for 300 new or expanded health-care centers to serve an additional one million people. The centers are nonprofit health clinics in poor neighborhoods or regions without enough doctors that treat people even if they cannot afford to pay.

At the same time, Mr. Bush would reduce projected spending on Medicare, the federal health program for the elderly, and Medicaid, the federal health program for the poor. The changes would make it more difficult for the poor and elderly to receive care, warned the American Academy of Family Physicians, which has asked Congress to reject the proposed cuts.

Housing. Mr. Bush asked for a $1-billion reduction in the community development block grants program, which supports numerous housing and economic-development efforts by nonprofit organizations. The president made a similar request last year, which Congress ignored. Among other efforts that would see sharp reductions are programs to develop low-cost housing for the elderly and disabled. More money would go to housing for people with AIDS and programs to fight homelessness.

Nan Roman, president of the National Alliance to End Homelessness, a Washington advocacy group, said she welcomed the proposal to add funds to many housing programs, but felt “optimism and trepidation” about the overall housing budget.

“A lot of communities use block-grant funds to provide both housing and services for the homeless, and these cuts are a big blow,” she said. “It’s no good getting an increase in homelessness funding if in the end there are more people becoming homeless.”

International aid. Mr. Bush proposed spending $4-billion on overseas AIDS relief, and increasing funds for refugee assistance. Otherwise, Mr. Bush sought a $326-million cut in humanitarian and development aid.

Public broadcasting. The administration would take away $53.5-million of the $400-million previously set aside by Congress for the Corporation for Public Broadcasting for 2007. (Traditionally, federal funds for public broadcasting are committed two years in advance to help the organization plan its radio and television programming.) Mr. Bush proposed to take back another $50-million in fiscal 2008. Mr. Bush’s efforts to cut federal aid to public broadcasting failed last year; instead, Congress increased the Corporation for Public Broadcasting’s 2006 funds from $400-million to $461-million overall.

Social services. Mr. Bush proposed to freeze state grants for the primary welfare program, Temporary Assistance for Needy Families, at $17.1-billion, the same amount as 2006. The food-stamp program, which is expected to decline by $2.7-billion this year due to changes in eligibility requirements, would drop by another $57-million next year, to $33.2-billion.

Mr. Bush’s plan calls for completely eliminating the Community Services Block Grants, which received $630-million this year. The president said the grants are not awarded competitively and their effectiveness cannot be measured. The grants help 1,100 local antipoverty groups that run job-training and preschool programs, as well as provide other social services.

Mr. Bush would spend $150-million next year on a new program to promote “responsible fatherhood” among fathers who were unemployed or had low salaries, encouraging them to play a significant role in their children’s lives and to get and stay married, as well as other programs to support and strengthen families. Congress agreed to create the program late last year. The Compassion Capital Fund, which provides grants to local charities, including programs run by religious groups, would get $100-million, $36-million more than last year.

Volunteerism. Among the measures aimed at increasing the time and money that Americans give to charities, the president asked for an increase of $16-million for the Peace Corps in 2007, to $341-million.

Other programs did not fare as well.

The Corporation for National and Community Service would be cut by nearly $50-million, and the National Civilian Community Corps, which sends teams of workers to help localities fight fires, clean up after hurricanes, and conduct other public-service projects, would be eliminated.

AmeriCorps, the national community-service program, would receive $5.9-million less in grant money in 2007.

The president’s plan is available online at http://www.whitehouse.gov/omb/budget/fy2007/.