Anti-Poverty Programs in Peril

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February 5, 2011; Source: New York Times | Jacob Lew is President Obama's still relatively new director of the Office of Management and Budget (OMB). He must have fond memories of his previous stint at OMB a decade ago when the nation had a projected surplus of $5.6 trillion compared to the current predicament of projected deficits of $10.4 trillion over the next decade. In this New York Times op-ed, he offers a defense of cutting programs that "absent the fiscal situation, we would not cut" – specifically the Community Services Block Grant program, a mainstay of the nearly 1,100 community action agencies.

"Since they were instituted, community service block grants have helped to support community action organizations in cities and towns across the country. These are grassroots groups working in poor communities, dedicated to empowering those living there and helping them with some of life’s basic necessities. These are the kinds of programs that President Obama worked with when he was a community organizer, so this cut is not easy for him. Yet for the past 30 years, these grants have been allocated using a formula that does not consider how good a job the recipients are doing," he wrote.

But rather than fixing the purported problem of evaluating the CAAs' CSBG performance, Lew offers a nonsequitur solution: "The president is proposing to cut financing for this grant program in half, saving $350 million, and to reform the remaining half into a competitive grant program, so that funds are spent to give communities the most effective help." In other words, they will slash the program and search for an entirely new infrastructure to implement CSBG rather than sorting through the performance of stronger and weaker CAAs that by their mission are entirely dedicated to serving the poor.

CAAs have less political power than other constituencies, as evidenced by White House plans to cut the Community Development Block Grant program. The proposed cut for a program used by the nation’s mayors and governors is only 7.5 percent compared to the 50 percent surgical operation on CSBG – and the White House doesn't seem to be looking for alternatives to municipal governments to carry out CDBG, even though city governments are probably no less uniform than CAAs in their performance.

And watch and see how the mayors and governors handle their reduced CDBG allotments, see which portion gets lopped the most. We'll bet federal budget money it is the proportion that goes to nonprofits in the form of public service grants. Lew says that the President wants to work with Congress to help fashion a program of discretionary budget cuts and deficit reduction in a "responsible, sensible and achievable plan to put the country on a fiscally sustainable path." Somehow, the idea that whacking CSBG helps fiscal sustainability eludes us.—Rick Cohen

  • Ken Knox

    CDBG has been corrupted over the years by local governments using more to pay for their own staff than allocating direct support to nonprofits. It would be a good idea in any of these cuts to limit the amount of funds that can be retained by governments themselves to pad their payrolls — and require more direct support to those delivering services. Additionally, if the CSBG funds are allocated ONLY on the basis of competition, that will knock out many of the small, but effective ones that alleviate suffering but can’t be as competitive because of grant-writing skills. When will there be allocation solutions that include both capacity to deliver and value of the mission?

  • Shari

    Mr. Knox: You may not be familiar with the CDBG program but there is already a 20% administration cap and a 15% cap for nonprofit public services. I am sorry you have a bad opinion of CDBG but these funds are the only funds left for urban revitalization. The elimination of CDBG is going to be a disaster for communities that are already struggling with reduced government revenues and most importantly, the hundreds of subcontractors that benefit from these activities and projects at the local level. The private sector is not going to replace these jobs.

  • Howard

    Good comment, Shari. Already some of the wonk at OMB and their follow travelers in the think tanks want to criticize the program. Bottom line is that it’s the most visible sign of our tax dollars being returned to revitalize urban neighborhoods. Call us when someone in DC has the cojones to take on the real budget busters.

  • rick cohen

    Dear Shari and Howard: Yes, when will Washington take on the real budget busters. Although it starts with a paean to Teach for America ruing the potential reduction of TFA’s budget earmark, Richard Cohen’s op-ed in today’s Washington Post cites reducing entitlements, cutting away at the military budget, and raising taxes on the rich and superrich as the ultimate answer. And that Richard Cohen isn’t me, by the way.