Within a month, the Office of Management Budget announced it would curtail the budget of the National Institute of Mental Health (NIMH), phase out training of clinicians, interrupt research, and eliminate services. Cutbacks to staff followed; chaos ensued. Experienced people left, others remained in government service but were forced into menial jobs. Trained professionals were reassigned to labs to dissect dead rats; science writers were reassigned to typing pools. The Mental Health Systems Act would be disappear. Instead, the Omnibus Budget Reconciliation Act (1982) would merge money for mental health programs into block grants, and with fewer dollars going to the states. They had the discretion to use them however they saw fit, often to perpetuate programs already deemed problematic. The pretense for all this was the president's concept of a "new federalism."
"Many of our dreams were gone," wrote Rosalynn Carter in Helping Someone with Mental Illness. "It was a bitter loss."
This could have been enough, but it was not. Pres. Reagan attempted to restrict criteria for determining eligibility for SSI, thought to be a safety-net. Nearly 2.6 million people were receiving insurance because their disability prevented them from working. New evaluations for eligibility led to widespread terminations. Of those who were terminated, about half appealed, and in two-thirds of the cases, administrative law judges reversed the decision. The process took nearly a year, during which time they, and their families, were deprived of promised help.