Households with an average income of less than $10,000 a year will lose at least twice as much as the average higher-income household from domestic spending cuts enacted since President Reagan took office, the Congressional Budget Office reported yesterday in its most comprehensive study so far on the subject.
The CBO, in a staff memorandum prepared for House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.), examined federal spending in 26 "human resources" categories, including civil service retirement, education, student loans, Social Security, Medicare, job training, health services and welfare.
Although some programs provide benefits only to the poor, the largest--including Social Security and Medicare--cover all income groups.
The CBO study found that spending for the 26 programs from fiscal 1982 through fiscal 1985 will be $110 billion less as a result of changes passed from 1981 through 1983 than they would have been otherwise. Defense outlays, on the other hand, will come to $90 billion more from fiscal 1982 through 1985 than they would have been otherwise as a result of changes enacted in the same period.
The CBO calculated that in 1985, the average reduction of benefits as a result of the cuts would be $470 for households with less than $10,000 in income, compared with $280 for all households.
Higher income groups would lose far less. For those in the $10,000 to $20,000 range, the average loss was calculated at $360 per household; in the $20,000 to $40,000 range, at $180; in the $40,000 to $80,000 range, $160, and in the over $80,000 range, $170.
The figures in the study are not absolute dollar cuts from previous totals. Rather, they compare what would have been spent under the law as it stood before Reagan took office with what is now projected to be spent, given the same economic conditions and taking into account the program changes enacted from the start of 1981 to July, 1983.
The study is sure to fuel the growing quarrel between Reagan and Democratic leaders, expected to be a major issue in the 1984 campaign, over whether the president has been fair to the poor in his demands for reductions in federal spending.
O'Neill, in releasing the document, said it demonstrates that "despite repeated denials from President Reagan, administration cuts have been targeted on families of moderate and low income.
"Despite the president's recent statements that he is 'perplexed and concerned' at news of rising poverty and hunger in America, CBO documents that Reagan policies have contributed to it," O'Neill said.
"He has denied millions of American families the basics of the American dream . . . . That truth will have major consequences in 1984."
The CBO, a nonpartisan arm of Congress, has made similar, less comprehensive studies of the impact of budget cuts.
Its counterpart in the executive branch, the Office of Management and Budget, said yesterday that it has "no reason to doubt the CBO figures," but added that the study did not include the effects of tax reductions on individuals or the income gains that families might receive if the program changes ultimately lead to a stronger economy and a rein on inflation.
The OMB also said that because the reductions are averages, many millions of people are unaffected by the budget reductions. In addition, it said, the total percentage reduction (7 percent) in human resource outlays "is hardly a major shredding of the social safety net."
The OMB said a large portion of the total cut resulted from the six-month delay in a Social Security cost-of-living increase as part of the bipartisan rescue package for the system. Another large cut, OMB said, came from "abolition of the discredited public service employment program." It argued that most of the Medicare cuts were in reimbursements to hospitals, not in benefits to the elderly.
Among the major findings of the CBO study:
Of the $110 billion in cuts, about $26 billion was in retirement programs, including Social Security, civil service pensions and veterans' benefits. Cuts in other income security programs, such as food stamps, unemployment insurance, housing aid and Aid to Families with Dependent Children (AFDC), came to $27 billion. Health program cuts totaled $18.5 billion, mostly from Medicare. (In addition, CBO said, Medicare patients will pay $820 million more out of pocket because of higher premiums for enrollment in the doctor-insurance part of Medicare.) The cuts in education and social services programs were $13.7 billion, and in employment and training programs, $25 billion.
* Overall, the $110 billion in cuts reduced 1982-1985 human-resources spending from a projected $1.63 trillion to $1.52 trillion, about 7 percent.
* Some individual programs were cut far more. Overall, jobs programs were cut 60 percent, education and social services 20 percent. Public service employment dropped 99 percent. Health programs other than Medicare and Medicaid lost a fifth, as did the social services block grant. Guaranteed student loans went down 27 percent, child nutrition 28 percent, foods stamps and AFDC 13 percent each, general employment and training 35 percent, and compensatory education for disadvantaged children 17 percent.
* As a result of program changes enacted, more than 325,000 families lost eligibility for AFDC, and another 325,000 to 350,000 had benefits reduced.
* About 1 million lost eligibility for food stamps as a result of the changes.
* School lunch participation dropped by 3 million after program changes were enacted.
* From 1981 to 1982, 700,000 fewer students received guaranteed student loans.
* Public service job slots, 350,000 of them, that would have employed 600,0000 for an average of seven months each were eliminated.