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Tax Bills’ Potential Impact on Federal Education Funding: Big Cuts, or Meh?

By Andrew Ujifusa — November 16, 2017 3 min read
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Over the last week or so, we’ve highlighted several provisions of the two GOP-backed tax reform proposals in Congress that could specifically impact education. But there’s one question we haven’t really dealt with yet: Would the tax bills lead to funding cuts at the U.S. Department of Education?

As they are currently written, the tax cuts in the House and Senate proposals would be financed with about $1.4 trillion in deficit spending over the next decade. In other words, they’re not “deficit neutral” as that term is traditionally understood, and would add to the national debt, although Republicans argue that this leaves out “dynamic scoring” of the budget, in which tax cuts spur economic growth and ultimately boost tax revenue. However, if those tax cuts become law and they do increase the national debt, it could factor into long-running from Republicans in Congress that the national debt must be reined in. (There’s a separate argument to be had about whether approving tax cuts that add to the debt and then cutting spending to reduce the debt is sound policy, but let’s leave that aside.)

If spending is reined in, that means budget cuts, and the odds are that Republicans would advocate cuts to discretionary spending, the kind that funds the Education Department.

That’s the line of reasoning—and the worry—of 43 education advocacy groups. In a Tuesday letter to the Senate, those organizations wrote the following:

If tax reform is deficit-financed and adds to the federal debt, as both the budget resolution and the House bill would allow, there will be increased pressure for Congress to curb direct spending for education and all discretionary spending. Already tight appropriations caps have caused Congress to propose to slash funding for important education programs and to resort to cutting Pell Grant carryover funds to maintain yearly education funding.

However, there are other elements of this situation to consider.

The national debt has been growing for years: At the start of fiscal 2011, the national debt was $13.6 trillion, and it now stands at approximately $20.5 trillion. In fiscal 2011, the education department’s discretionary spending was $68.3 billion, and it’s now $68.2 billion—its biggest one-year dip was to $65.7 billion. Of course, this year, Republicans control both the Congress and the White House, marking a departure from the previous half-dozen years or so. But would adding $1.4 trillion to that debt over a 10-year period (just over 7 percent of the current total) be a trigger that leads to dramatic cuts at the Education Department and other areas of discretionary spending? Some might be skeptical.

One such skeptic is Lindsey Burke, the director of the Center for Education Policy at the Heritage Foundation, a conservative think tank that supports a smaller federal education budget.

“If only we had seen the type of fiscal discipline, whether it’s at the federal level or the state level in K-12 spending, that any sort of downward pressure should have caused, we’d be in a better place,” Burke said. “The minute you suggest that maybe a program could be reduced, all hell breaks loose. I’m skeptical that we would actually see a reduction.”

Tax bills aside, there is already some appetite in Congress for cutting the department’s budget. The House appropriations bill would cut federal spending on education by about $2.3 billion. However, that’s much less than the $9.2 billion cut the Trump administration wants. And the Senate education appropriations bill would keep the department’s budget basically flat—technically, it would provide a slight increase of $29 million.

Noelle Ellerson Ng, the associate executive director of AASA, the School Superintendents Association (one of those 43 groups that wrote to the Senate), acknowledged that precedent shows there’s no automatic link between higher debt levels and cuts to education. But she added, “If it is not their intent to cut education funding, I would love to get that in writing.”

If the tax cuts go through, Ng said, “There will be an additional fiscal burden on annual appropriations for years to come.”

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