At least 20 million to 25 million people, most of them living below the poverty line, would have their incomes cut as a result of President Reagan's proposed reductions in welfare, public service jobs, food stamps and the school lunch program, according to a study by the Congressional Budget Office.
The study, prepared at the request of Sen. Edward M. Kennedy (D-Mass.) and Rep. James R. Jones (D-Okla.), shows that changes in those four programs alone would mean cuts for up to one American in 10. Among families headed by women, particularly the nonwhite.
The CBO said that even these figures "considerably understate" the real impact of Reagan's budget because his proposals to reduce Social Security, Medicaid, unemployment insurance, fuel aid and assorted other health and social services programs were not included in the study.
The CBO said that because of data limitations, it was able to estimate the impact of only $5.3 billion in fiscal 1982 welfare, public service job and food cuts, and had to leave out the impact of $10.1 billion in other cuts in Social Security, Medicaid and other programs for the poor and near-poor. If these had been included, the affected total would have been significantly higher.
Despite its limitations, the study is the most comprehensive survey yet of the overall effect of the Reagan budget cuts on the poor.
The findings are sure to provide ammunition for Kennedy and others opposed to the Reagan proposals. Reagan and his aides have repeatedly claimed that the Reagan budget cuts wouldn't hurt "the truly needy" but the CBO study clearly shows they would affect tens of millions of people below the poverty line or just above it.
Kennedy said yesterday, "It is ironic and tragic that an administration which proclaims itself to be pro-family has given us an anti-family budget which will put even more pressure on the family structure of those already living at the economic margin.
"This budget could be the final factor that causes many more families to break apart. For them, the administration's proposal is one of unequal justice and unfair sacrifice. It penalizes marginal families with children, those headed by nonwhite women."
The CBO study attempted to compare how much spendable income low-income families have today and how much they would lose or gain under Reagan's proposals for program cuts as well as his proposed reductions in federal income taxes.
A low-income family was defined as a family having cash income below the poverty line (currently $6,570 for a family of three and $8,410 for a family of four) or up to 150 percent of the poverty line. After identifying such families, the value of their food stamps and school lunches under current law and under Reagan's proposals was added to cash income, and then Social Security taxes and income taxes deducted.
The CBO noted that Reagan's income tax cuts would have little impact on the people studied who would receive less than one half of 1 percent of the total tax cut.
The key findings:
Overall, there are about 16.5 million families (40 million to 48 million people) at up to 150 percent of the poverty line, and about 51 percent would lose under the Reagan changes covered by the study. Most would lose only a few percentage points, but a small number (about 4 percent) would lose an average of 16 percent spendable income. Some, 14 percent, would gain a bit.
Out of the 16.5 million families, 1.5 million are the poorest in the nation, with incomes under 50 percent of the poverty line; about 57 percent of this group would lose.
Another 6.4 million families out of the 16.5 million total are currently at from 50 percent to 100 percent of the poverty line; 70 percent of these families would lose. Of those at 100 to 149 percent of poverty, only 36 percent would lose and a quarter would gain because of the Reagan income tax cut.
Low-income families headed by an aged person would be affected least, and families with children headed by a nonwhite woman under 65 would be hurt most. "Working poor" families who get welfare payments to supplement meager earnings would be hurt more than those who depend on welfare alone. Among the poorest families, 72 percent of those living in the South would lose, a far higher percentage than any other region.