Fiscal federalism and Trump’s budget proposals

As part of my work as a research assistant, I am working on a project that is very relevant to our class discussion of fiscal federalism. The report I am helping write looks at the New York City budget and examines how federal funding is used within it. It looks at the major categorical grants through which New York City receives funds and the program areas that receive the most of that funding, both in terms of total dollars and percent of the program’s budget.

One of our main research questions is how the drastic cuts proposed in President Trump’s two most recent budget proposals would affect social services funding in New York City. Trump has proposed severely cutting or entirely eliminating many federal social services grants to states and localities, both out of a general smaller-government-is-better philosophy and as a means to offset the enormous addition to the federal debt that will be caused by his tax cut bill.

One interesting example to examine for this question is that of the Supplemental Nutrition Assistance Program (SNAP). This is a federal entitlement program which provides cash assistance for buying groceries to families meeting certain income requirements. The federal government also provides a certain amount of grant funding to states and localities to help them administer the program and provide related support services like job training and employment assistance.

Trump’s 2019 budget proposed significant cuts to SNAP funding over the next 10 years. SNAP, though it is categorized as mandatory spending, is up for funding reauthorization as part of the Farm Bill currently under consideration in Congress. While the Senate version of the bill essentially proposes to reauthorize the program at its current level, the House version suggests imposing significantly stricter work requirements in order for people to be eligible to receive SNAP. This would reduce eligibility for the program by millions of people, essentially shrinking it overall, in line with Trump’s proposals.

Before the midterm elections, the bill was stuck in conference committee as the two chambers tried to work out their disagreements over the work requirements issue. Now, observers are saying that House Republicans will likely want to move quickly to pass the bill before the end of the year, and will be more likely to compromise on SNAP work requirements, to avoid the possibility of a Democratic rewrite of the bill come January.

This is good news for SNAP, which has consistently been found to be one of the most effective anti-poverty programs funded by the government. SNAP generally (though not as much currently) enjoys bipartisan support and could be said to be an instance of effective operation of the fiscal federalism system in the U.S.

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