Special report: Think tank’s ties to Trump raise stakes for Vermont funding

Heritage Foundation

The Washington headquarters of the Heritage Foundation, on Massachusetts Avenue. Photo by Jasper Craven/VTDigger

WASHINGTON — A few blocks from the U.S. Capitol is the headquarters of the Heritage Foundation, a conservative think tank that has quickly become the brain trust for President Donald Trump’s White House.

Detailed policy proposals from Heritage are being used whole cloth by the Trump administration, which is largely staffed by novices to government. According to CNN, more than a dozen former Heritage staffers have been directing transitional efforts at numerous federal agencies.

Donald Trump

Donald Trump speaks in Laconia, N.H., in July. File photo by Michael Vadon/Wikimedia Commons

Trump’s campaign tax plan was drafted by Stephen Moore, a Heritage economist. A number of the president’s priorities — from revoking federal funds for “sanctuary cities” to gagging agency communications with the press — are part of the Heritage playbook. And Neil Gorsuch, Trump’s Supreme Court nominee, came from a list of potential justices that Heritage helped draft.

Another critical area where Heritage holds sway is the federal budget process.

Trump’s top two budget men in the White House are both former Heritage wonks: Ross Vought, who was a staffer for Mike Pence back when the vice president was an Indiana congressman, and John Gray, who has worked for budget hawk Sen. Rand Paul, R-Ky.

Multiple reports show that as Trump looks to slash federal spending by $10.5 trillion over the next 10 years, he is relying heavily on Heritage’s 2016 “Blueprint for Balance”.

In light of the influence that Heritage has exercised over other Trump decisions, the organization’s blueprint is being studied by bureaucrats from the halls of Washington to the Green Mountains of Vermont for hints of what the future might hold.

The Heritage cuts, if fully implemented, would impact areas that affect the day-to-day lives of everyday Vermonters: air quality, education, free lunch programs in schools, road maintenance and more. Rural farmers and businesses would lose access to grants and loans, and job training programs would dry up. Taken in total, the cuts would fall the hardest on the state’s most vulnerable.

As for the leaders at the Heritage Foundation, the cuts would fulfill major pillars of the organization’s core mission: Reduce the national debt and the role of government.

At the foundation’s 2016 President’s Club Meeting — held at the Trump International Hotel on Pennsylvania Avenue in December — Heritage President Jim DeMint sounded optimistic that change was quickly coming.

Introducing Pence as the keynote speaker, DeMint began by saying, “I’m trying not to be too giddy tonight.”

“There’s just something really sweet about standing in the Trump hotel, just a few blocks from the White House, introducing a great friend of mine and his wonderful wife, Karen, who are going to be the next vice president couple of the United States,” DeMint said. “It’s very sweet.”

FEDERAL DOLLARS KEEP VERMONT GOING

The stakes for Vermont in the federal budget process are high, because money currently flows to dozens of crucial grant programs and bolsters the work of state agencies.

According to Finance Commissioner Andy Pallito, Vermont is a “net importer” of federal money, meaning it takes more out of the pot than it puts in.

Of the $5.7 billion Vermont budget in fiscal year 2016, roughly 35 percent — or $2.13 billion — consisted of federal dollars. (In addition to grants and subsidies, Vermont received $523.1 million in federal contracts last year.)

The largest single allocation of federal dollars goes to Vermont’s Medicaid program, which received more than $1 billion from Washington in 2016.

Yet federal dollars seep into all aspects of Vermont government. In fiscal 2016, federal money was funneled into 25 state agencies and departments. In addition to large state programs, D.C. dough supported dozens of smaller projects, from the preservation of historic buildings ($671,830) to efforts to make voting locations more accessible to people with disabilities ($38,159).

In fiscal 2016, the most federal grant money in Vermont went to the following areas:

  • Human services: $1.5 billion
    Many of the federal dollars go to Vermont’s neediest and include allocations for Medicaid ($1.1 billion), SNAP food benefits ($118 million), Temporary Assistance for Needy Families ($33 million), the Low Income Home Energy Assistance Program ($17 million) and weatherization efforts for the poor ($1.2 million).
  • Transportation: $282 million
    Top allocations include highway construction ($227 million), airport improvement programs ($15 million) and rural improvement grants ($14 million).
  • Education: $128 million
    The biggest allocation in this area is in the form of Title I grants for schools in impoverished areas ($33 million). Other federal dollars go to support special education ($27 million), the National School Lunch Program ($23 million) and efforts to improve teacher quality ($10 million).
  • Labor: $91 million
    The biggest allocation for labor is $80 million in unemployment insurance. Other assistance includes money for various job training and career programs for adults ($3 million) and the American Apprenticeship Initiative ($374,000)
  • Natural resources: $44 million
    Nearly $18 million was contributed by the federal government in 2016 to the Drinking Water State Revolving Fund, which helps communities with wastewater treatment infrastructure and clean water programs. Other programs partly funded by the feds include the Forest Legacy Program ($4 million) and sportfish restoration efforts ($3 million), as well as many more air and water quality efforts.
  • Housing and community development: $24 million
    More than $20 million was contributed by the federal government for community development block grants, which help build everything from senior housing facilities to local libraries. An additional $420,000 went toward technical assistance for businesses, while $550,000 funded various brownfield cleanup sites.

Pallito said Trump’s budget process “doesn’t seem to be very coherent,” adding that he assumed some programs were going to face cuts but there was no certainty over which ones. He said he was optimistic that Republican states that rely on federal assistance would push back on any draconian cuts.

Pallito said the state has set aside roughly $133 million of reserve money that could be deployed in the case of major cuts and that programs for Vermont’s neediest would be prioritized. About $100 million is from Medicaid overpayments from the federal government that may need to be repaid as part of a liability that has not yet been resolved.

Roughly one-third of the state’s $133 million in reserves would also qualify for federal match money, as long as the federal government does not alter or eliminate the reimbursement formula for Medicaid and other human services programs.

“We’ve tried to put ourselves in a position where we could sustain cuts in the future,” Pallito said. “But we don’t have nearly the level of money we need for long-term base cuts, so we would have to make some cuts at the state level if something major were to transpire.”

Asked if he was willing to push his boss, Republican Gov. Phil Scott, to reconsider his pledge not to raise taxes or fees if big federal cuts came, Pallito said, “He’s pretty serious about the pledge.”

“Part of my measured approach in all of this is not freaking my boss out until the time comes,” he continued. “When we really need him to react, we will have him react.”

Heritage Foundation

A banner on the side of the Heritage headquarters in Washington. Photo by Jasper Craven/VTDigger

POTENTIALLY AT RISK: LAW ENFORCEMENT

The Hill reported in January that the administration was considering adopting a number of the Heritage Foundation’s recommended cuts, including the 24 Department of Justice grant programs that assist victims of sexual abuse.

U.S. Sen. Patrick Leahy, D-Vt., has fought to strengthen these grant programs throughout his career, including in the 2013 reauthorization of the Violence Against Women Act. Following The Hill report, Leahy sent out a statement maligning the shadow work of Heritage.

“The Heritage Foundation may set priorities for the far right in Congress, but it does not set priorities for the rest of America,” said Leahy, who received a 7 percent approval rating on the last Heritage congressional scorecard. “The Violence Against Women Act has a proven track record protecting women and the victims of abuse. If the president-elect outsources his budget to the far right he will be doubling down against women who have survived abuse. I will fight against any attempt to undermine a law that has saved lives and enabled victims to rebuild their lives.”

The elimination of Violence Against Women Act programs would have wide-ranging ramifications in Vermont.

Karen Tronsgard-Scott. Photo by Alicia Freese

Karen Tronsgard-Scott. File photo by Alicia Freese/VTDigger

In October, Leahy announced more than $9 million in federal grants to aid victims of domestic violence all across the Green Mountain State. These federal grants fund transitional housing in St. Albans for victims of sexual violence, counseling for battered LGBTQ youth in Chittenden County, and wraparound services for children in the Northeast Kingdom who are exposed to domestic violence. Federal grant money also underwrites legal representation for victims of sexual violence and even offers rehabilitative services for abusers.

“We are really worried about the loss of these funds, and for survivors losing access to services and safety,” said Karen Tronsgard-Scott, the executive director of the Vermont Network Against Domestic and Sexual Violence. “These are lifesaving programs.”

The Justice Department reported that the rate of sexual violence against women fell 64 percent in the decade after VAWA was first passed, an achievement Tronsgard-Scott warned could be squandered by defunding the 24 grant programs.

“This funding is absolutely needed for us to continue to make inroads,” she said. “It’s allowed us to focus on intervening before things get really dangerous, or even lethal.”

TRANSPORTATION

Should the Heritage Foundation plan be fully implemented, Amtrak would lose all federal support.

This would likely result in Vermont’s already limited train service being diminished. Ticket prices could rise. And the defunding could also imperil plans for restored train service between Vermont and Montreal, as a key line of track from St. Albans to Canada requires repair.

The Essential Air Service program would also be scrapped. This federal subsidy program helps connect smaller airports, like the Rutland Southern Vermont Regional Airport, to larger airports. If the service were eliminated, Rutland’s commercial flights would likely cease.

Dairy farms

Milking time on a Vermont farm. File photo by Josh Larkin/VTDigger

RURAL ECONOMY AND AGRICULTURE

The Heritage blueprint calls for the elimination of a number of programs within the U.S. Department of Agriculture that are implemented in Vermont, including the Conservation Technical Assistance Program, which costs $748 million annually. Vermont receives roughly $300,000 annually under this program, which is run by the USDA’s Natural Resources Conservation Service.

The conservation assistance program helps farmers operate more effectively and sustainably. Without any cost to the farmer, USDA officials help those in the agriculture industry develop skills to improve the long-term sustainability of lands, through efforts to reduce erosion and improve soil and water health.

These assistance efforts help landowners comply with various federal laws, including the Conservation Compliance Provisions of the l985 Food Security Act

Linda Corse, who milks 60 cows on her 301-acre farm in Whitingham, said Conservation Technical Assistance Program officials have been crucial to ensuring the farm follows federal regulations. She said the program could use even more support, since there aren’t enough engineers and experts to help all the farmers in the region.

“The technical expertise of the USDA — when they have enough staff — is invaluable to us,” she said. “We can’t begin to keep up with all the current data and the regulations without them, and it would be very hard to have any of that funding cut.”

Another USDA program Heritage wants to cut is the Rural Utilities Service, which has provided grants to help Vermont build up infrastructure throughout rural areas, from telephone service to water treatment. The internet provider VTel is one of the largest beneficiaries of federal funds from the Rural Utilities Service.

Another USDA program Heritage hopes to nix is the Rural Business-Cooperative Service, which offers grants in Vermont and other states — ranging from $10,000 to $500,000 — to businesses with fewer than 50 employees in rural areas.

The Community Development Financial Institutions Fund, which is a wing of the Treasury Department, is another loan option for rural businesses that is on Heritage’s chopping block.

In 2016, the CDFI Fund gave three large grants to Vermont entities: the Vermont Community Loan Fund ($1.25 million), the Flexible Capital Fund L3C ($700,000) and Rutland West Neighborhood Housing Services ($500,00).

ENVIRONMENT

The Vermont Agency of Natural Resources relies heavily on federal support to carry out its environmental work. The agency receives 40 percent of its funding from the Environmental Protection Agency.

Tens of millions of dollars supported environmental cleanup in 2016, on everything from cleanup grants for brownfield sites ($554,000) to aquatic plant control ($450,000).

In Trump’s first week, the White House ordered a freeze on all federal EPA grants, a move that alarmed Julie Moore, the secretary of the Agency of Natural Resources.

Although the freeze has since been lifted, Moore saw the move “as a harbinger of things to come.”

Emily Proctor Trail sign

A trail sign in the Green Mountain National Forest.

The Heritage proposal calls for the end of the Land and Water Conservation Fund. There have been recent attempts by Republicans to eliminate the fund, which has brought in a total of $123 million to support conservation efforts for the Green Mountain National Forest, the Silvio O. Conte Wildlife Refuge and the Appalachian Trail.

The blueprint also calls for hobbling environmental programs across the country, including the elimination of all green energy subsidies, which could slow economic growth in Vermont’s burgeoning green energy sector.

Heritage also proposes to eliminate the Department of Energy’s Office of Energy Efficiency and Renewable Energy, which recently funded a 66-kilowatt solar project in Williston. The pilot project allows for DOE studies on how to improve solar performance in harsh conditions.

Moore said her agency found the Heritage plan “disturbing,” especially for a state like Vermont where a clean environment is crucial to a healthy economy.

“There’s a number of ideas in there that would certainly reduce cost and reduce regulatory burden, but at the direct expense of the environment,” she said. “In the long term it wouldn’t save all that much money as we would have to remediate and address the problems that were created. Prevention has been the most effective way to reduce environmental contamination.”

In addition to the Heritage proposals, congressional Republicans have made it easier to privatize federal lands and are rolling back a number of environmental regulations that reined in pollution from the oil and gas industries. In early February, a freshman Republican House member introduced a largely symbolic bill aimed at eliminating the Environmental Protection Agency.

ARTS AND MEDIA

Heritage’s proposed cuts would weaken support for Vermont artists. The blueprint would eliminate the National Endowment for the Arts, which gave $600,000 to Vermont last year to support the state’s community of artists. Trump also supports the privatization of the Corporation for Public Broadcasting, which, according to its most recent financial report, allocated $1.7 million in 2014 to subsidize four public access stations in Vermont, including the Vermont PBS affiliate. The CPB also provides grants to 17 radio stations across the state, including Vermont Public Radio.

Footings and some structural parts of the historic Taftsville covered bridge were damaged by Irene. It's being restored but won't reopen until sometime in 2013. Photo by Andrew Nemethy

The historic Taftsville covered bridge after Tropical Storm Irene. File photo by Andrew Nemethy

DISASTER RELIEF

The Heritage proposal would slash spending at the Federal Emergency Management Agency, including at the Disaster Relief Fund, which provided more than $200 million to Vermont after Tropical Storm Irene. Heritage also proposes cuts to the Small Business Administration Disaster Loans Program, which loaned money to 80 ailing Green Mountain businesses after the storm gutted many downtown economies.

The blueprint would also eliminate FEMA fire grants, which have funded, among other things, gym equipment for the Colchester Fire Department and a thermal imaging camera for the Williston Fire Department.

DEFENSE SPENDING

Defense funding may be the only area where Vermont could see an uptick in federal dollars, as the president has promised “a great rebuilding of the armed forces.”

Still, while Vermont does have some industrial manufacturing, the state ranks last in the federal contracts it receives. A 2014 Defense Department report on state-by-state spending also shows that federal military contracts are disproportionately awarded to Chittenden County over more struggling areas of the state. In 2014, for example, Chittenden County received $166 million in defense dollars, more than 50 times as much as Caledonia County received, $3.3 million.

In recent years, a number of military contractors have laid off workers or shuttered plants in Vermont. L-3 KEO, a Massachusetts-based company that makes weapons control systems, shut down its Brattleboro plant in January.

Patrick Leahy

Sen. Patrick Leahy, D-Vt., at a recent Senate committee meeting. Photo by Jasper Craven/VTDigger

BUDGET WORK IN WASHINGTON

While Vermont’s federal funding may be in peril, the state’s two senators both hold key positions on fiscal committees.

Sen. Bernie Sanders, an independent who caucuses with the Democrats, is the top member of the minority on the Senate Budget Committee, which considers the president’s budget before submitting its own proposal.

Sanders’ office did not respond to multiple requests for comment on the budget process, how cuts could affect Vermonters and what role he planned to play to stop them.

After the budget committees hammer out broad funding levels, the House and Senate Appropriations committees craft detailed legislation appropriating money in 12 major areas, from agriculture to foreign aid.

Leahy is the top Democrat on the Senate Appropriations Committee, and aides say the committee is traditionally the least partisan on Capitol Hill. Leahy is close with Appropriations Chairman Thad Cochran, R-Miss. The two recently collaborated on the Farm to School Act of 2015, which would have allowed for more local agriculture to be implemented in school lunch programs.

Leahy’s appropriation aides have been eyeing the Heritage proposal with alarm and say that a top priority of Vermont’s senior senator will be to protect important domestic programs while fighting huge increases in defense spending.

The fight by Democrats to save dozens of discretionary programs will be coupled by an expected push by Republicans to raise the retirement age and reduce mandatory spending on entitlement programs like Medicaid and Medicare through switching to block grants. (The biggest cost-cutting measure in the Heritage plan is block-granting Medicaid with fixed dollar amounts that don’t respond directly to a state’s needs.)

Leahy’s spokesman, David Carle, said that with so many programs in danger, Trump was continuing his effective political tactic of overloading the system.

“You can’t fight every fight,” Carle said. “You have to pick and choose because there is limited time and limited resources.”

As the ranking member on Appropriations, Leahy is also vested with oversight powers to ensure that federal money is allocated effectively. These powers were set forth in the the 1974 Congressional Budget and Impoundment Control Act, which was passed after President Richard Nixon copiously invoked his impoundment powers to bar the Department of Treasury from transferring congressionally appropriated funds to various agencies.

“There are very specific requirements, in law, that when we appropriate money the executive branch has to execute those appropriations,” said a top Leahy Appropriations aide, who requested anonymity because he is not authorized to speak to the press. “Leahy’s staff will be tracking very closely to see whether the Trump administration decides to (flout) the law by not, for example, spending money on climate change that’s been appropriated for climate change.”

Leahy staffers contended that the Heritage plan would not pass the Republican-controlled Congress. In 2015, when Republicans in the House introduced a budget proposal filled with Heritage language, it was rejected by a vote of 294 to 132. (One member who voted for the plan was Mick Mulvaney, who is now Trump’s director of the Office of Management and Budget.)

The top Leahy aide, who has worked for nearly 40 years in the appropriations process, said the total elimination of federal programs is politically disastrous. Precise cuts with a significant impact are much easier for legislators to swallow, the staffer said.

“What I generally find in these situations is that, instead of shuttering programs, you hurt programs, because there generally is bipartisan support for that,” the aide said. “If you set a top line on spending for discretionary programs — that’s a 5 percent cut. Those are cuts that have consequences across the board. You are not investing in special education, you are not investing in education for the disadvantaged, you are not investing in highway programs or transit programs or housing programs or rural development programs.”

“Rather than having headline-grabbing terminations of programs, every agency just takes it on the chin,” the aide concluded.

Correction: The Vermont Sustainable Jobs Fund was not the recipient of CDFI funding. Funding went to the VSJF Flexible Capital Fund L3C, a separate for-profit entity.

Jasper Craven

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