Trump Budget Would Cause Great Harm to New Jersey

The human cost of this spending plan will be most severe in states like New Jersey

Published on May 23, 2017 in Tax and Budget

Updated May 24, 2017 with additional information on the size of the TANF cut to New Jersey, SNAP cuts’ impact on the New Jersey budget, and on how cuts to CHIP would harm the state.

The spending plan unveiled today by President Trump would cause great harm to New Jersey, damaging the state’s low-income and working-class families the most. Deep cuts to health care, food assistance, aid for the disabled and much much more are paired with massive tax cuts for the wealthiest Americans, which will cause the yawning gap between those doing very well and the rest of us to grow.

The proposal, which is also built on highly unrealistic growth projections, is an enormous cost shift from the federal government to states. As a result, the human cost will be most severe in states like New Jersey, where we already face chronic budget shortfalls and don’t have adequate resources to meet the needs of our residents.

Among the most damaging of the Trump cuts:

More than $600 billion in cuts to federal Medicaid funding over 10 years: These deep cuts to Medicaid come on top of the over $800 billion in Medicaid cuts included in the version of the American Health Care Act passed by the House. 1.6 million New Jerseyans rely on Medicaid for health coverage; federal funding for Medicaid in New Jersey stands at about $10 billion a year. Trump’s proposal fundamentally changes the entitlement structure of Medicaid by turning it into either a block grant or per-capita cap for states.

Nearly $200 billion in cuts to federal food assistance funding over 10 years: This equals an estimated $2.1 billion cut to the Supplemental Nutrition Assistance Program (SNAP) in New Jersey. In 2016, more than $1 billion in federal SNAP dollars kept around 800,000 struggling New Jersey individuals from going hungry. SNAP kept 155,000 people out of poverty in New Jersey, including 77,000 children, per year between 2009 and 2012, on average. Trump’s proposal dramatically shifts costs for SNAP to states by changing it from a program fully funded by the federal government to one where states must pony up an average of 25% of the costs. If that change were immediate, the cost to New Jersey’s state budget would be about $306 million a year.

$40 billion in purported savings that will be achieved by barring undocumented residents from receiving child care tax credits and the Earned Income Tax Credit: The IRS already requires a Social Security Number – not an Individual Taxpayer Identification Number (ITIN) – to receive the EITC, so what this change will be remains unclear. On the child care tax credit side, citizen children of undocumented parents with ITINs are eligible – and these are the families that would likely be hit the hardest. There are 128,000 such children in New Jersey.

$22 billion cut to TANF, which provides cash assistance for the poorest Americans: Federal funding for the program has not changed since the late 1990s, when cash assistance was turned into a block grant. Since then, due to inflation, the value of the funding has been cut in half. This is one of the reasons why about 90% of all children living in poverty in New Jersey receive no assistance from TANF. A further federal funding decrease would decimate this program – particularly in states like New Jersey, which hasn’t put up any state money to increase benefit levels for 30 years. NJPP estimates that Trump’s budget would cut New Jersey funding for TANF by 10 percent, or $39 million a year.

Changes to the Children’s Health Insurance Program (CHIP), which covers about 8 million Americans: NJPP estimates that 35,000 New Jersey children would be affected by the cut in the federal matching rate to 50 percent for kids above 250 percent of the federal poverty level. The state would have to replace those lost federal dollars or cut eligibility.

A complete elimination of the Low Income Home Energy Assistance Program (LIHEAP) program: LIHEAP helps approximately 800,000 low-income New Jerseyans — including many poor seniors — pay heating bills. Under the program, New Jersey received $116.3 million in the 2016 federal budget to help these families pay their bills.

A complete elimination of the Community Development Block Grant: This which supports housing, economic development and social service projects, mainly for low- and moderate-income New Jerseyans. In the 2016 federal budget, New Jersey received $81.3 million from the federal government under this grant.