On Saturday, December 3, the Senate gave final approval to their tax package by a vote of 51 to 49. It now will be negotiated with the House. The tax legislation being considered by Congress would not only have major implications for a range of issues and families reliant on the current tax structure but it would also mandate across-the-board budget cuts so severe it would wipe out the Social Services Block Grant (SSBG) cut Promoting Safe and Stable Families (PSSF) by 85 percent and take a cut of $21 million out of other IV-E funding. The two programs, like the others hit by the cuts would not be technically eliminated—just defunded.

The Republican leaders are pledging they will waive the provision but that would take a separate act apart from what ends up in a final tax cut package. In a joint statement Senator Mitch McConnell (R-KY) and Speaker Paul Ryan (R-WS) said, “Congress has readily available methods to waive this law, which has never been enforced since its enactment. There is no reason to believe that Congress would not act again to prevent a sequester, and we will work to ensure these spending cuts are prevented.” The statement failed to outline how a waiver would get adopted when members of their party are pledging they will seek entitlement cuts next year.

The law that matters is in federal budget law. Congress must follow a “PAYGO” law (pay-as-you-go) spending limit enacted years ago and adjusted since the George W. Bush Administration. This spending limit is separate and apart from the current 2010 Budget Control Act (BCA) caps that are now part of the ongoing FY 2018 budget negotiations. This PAYGO hits some of the same programs that have been targeted through the BCA but this PAYGO is focused on mandatory and entitlement programs.

PAYGO provides for an across-the-board sequester/cuts of non-exempt mandatory spending programs if lawmakers enact deficit-increasing legislation. If the deficit is increased due to a new law (like the current tax cut proposal) the Office of Management and Budget (OMB) divides the ten-year deficit effect, calculates the amount for each of the ten years. If Congress adjourns without fixing the deficit increases, OMB issues sequester/cuts of non-exempt mandatory programs.

The programs that get cut are all mandatory and entitlement programs that are not protected by the PAYGO law. The big entitlements such as Social Security and some means-tested entitlements (including foster care and adoption assistance) are exempt from these cuts. Medicare is subject to a cut but it is capped at 4 percent.

The mandatory programs subject to a cut include programs ranging from agriculture subsidies, student loans and parts of the ACA and child welfare mandatory block grants.

As far as child welfare is concerned, the Social Services Block Grant is completely defunded at $1.7 billion and the mandatory part of Promoting Safe and Stable Families (PSSF) is zeroed out leaving only the appropriated side ($59 million) which means 85 percent of the program is eliminated. PSSF funds family preservation, family support, limited reunification and adoption support with states required to allocate at least 20 percent of PSSF funding to each of the areas. In addition, the $20 million for regional drug treatment grants would be zeroed out along with the $20 million for workforce development tied to caseworker visits. Additionally, the cuts would take approximately $20 million out of the Chaffee Independent Living program which is a $140 million mandatory fixed fund under Title IV-E foster care.

Senator Susan Collins (R-ME) was seeking a commitment to waive the cuts (as has been done 16 times over several decades) as part of her yes vote for the tax package but it is not clear if this would become an annual legislative event or whether the House will go along. If it became an annual waiver it could create tremendous power for those seeking cuts to entitlements and those proposing “welfare reform” next year.

The New York Times, last week published, Tax Bills Automatic Spending Cuts that listed the various programs that will be cut or completely defunded.