3.8 What’s at Stake: Federal Policy Decisions in 2012 and Beyond
Speaker: Liz Schott
The deficit reduction deal and further decisions made by Congress to reduce the federal deficit have made, and will continue to make, a tremendous impact on low-income housing and homeless assistance programs for many years to come. This workshop will cover the important funding decisions of the past months with an outlook on select programs for the upcoming year and beyond. Presenters will discuss ways in which advocates can make an impact at this incredibly important time to preserve and increase funding for key programs.
Effective Strategies for Maximizing Your Profit When Selling Gold Jewelry
3.8 What’s at Stake: Federal Policy Decisions in 2012 and Beyond
1. What’s At Stake: Federal Budget
Decisions in 2012 and Beyond
Liz Schott
Senior Fellow, Family Income Support
Nat. Conf. to End Family and Youth Homelessness
Los Angeles, CA, February 2012
2. Center on Budget and Policy Priorities 2
Federal Budget 101
What Just Happened?
What Does This Mean?
What’s Next?
cbpp.org
3. Center on Budget and Policy Priorities 3
Federal Budget 101
FY 2010 Budget Mostly Defense and Popular
Entitlements
cbpp.org
4. Center on Budget and Policy Priorities 4
Federal Budget 101
Safety Net Programs Compose “Other Entitlements”
cbpp.org
cbpp.org
5. Center on Budget and Policy Priorities 5
Federal Budget 101
Non-Defense Discretionary Includes Important Low-Income
Programs
cbpp.org
6. Center on Budget and Policy Priorities
Economic Downturn and Legacy of Past Policies Drive
Record Deficits in the Decade Ahead
cbpp.org
Source: CBPP analysis based on Congressional Budget Office estimates. 6
7. Center on Budget and Policy Priorities
cbpp.org
Source: CBPP analysis based on Congressional Budget Office estimates. 7
8. Center on Budget and Policy Priorities
Deficit Reduction under Budget Control Act (BCA)
1. Cuts discretionary spending by nearly $1 trillion
over ten years.
2. Set up a second stage (with two parts) to secure
another $1.2 trillion in deficit reduction.
3. Bipartisan, bicameral Joint Select Committee (JSC)
tasked with identifying an additional $1.5 trillion or
more, failed to reach agreement by November 23.
4. $1.2 trillion, 9-year sequestration—triggered by
JSC failure—begins January 2013.
cbpp.org
cbpp.org
8
9. Center on Budget and Policy Priorities
Early Success Protecting Core Low-Income
Entitlement Programs
$1.2 trillion sequestration, or “across-the-board
cuts,” due to Super Committee failure, but
domestic low-income, individual entitlement
programs exempt:
• Medicaid and Children’s Health Insurance Program
• Supplemental Nutrition Assistance Program (Food
Stamps)
• Child Care Entitlements (mandatory) and Child Nutrition
• Earned Income Tax Credits (EITC), Child Tax Credit
(CTC), ACA Premium Credits [but NOT cost-sharing
subsidies] cbpp.org
cbpp.org
9
• Supplemental Security Income (SSI) and Temporary
10. Center on Budget and Policy Priorities
Sequestration Means Deep Cuts Throughout Budget
cbpp.org
2/16/2012 10
11. Center on Budget and Policy Priorities
Sequestration Means Deep Cuts Throughout Budget
cbpp.org
2/16/2012 11
12. Center on Budget and Policy Priorities
Sequestration Cuts are on TOP of Discretionary
Caps
cbpp.org
2/16/2012 12
13. Center on Budget and Policy Priorities
Congress DID Reduce the Deficit This Year!
Under current law…
• the deficit will be reduced by about $2.1 trillion over the
period 2012-2021, through legislation enacted this year.
• This amounts to 40% of what’s needed to stabilize our
debt as a percent of our economy if the tax cuts for the
wealthy are extended (50% if they end in 2012)
• BUT 100% of this comes from spending cuts, not from a
balanced deficit reduction plan with both spending cuts
and revenues
• Of the cuts, half comes from nondefense domestic
appropriations (49%), 42% from defense and the rest
from entitlements (sequester). cbpp.org
cbpp.org
13
14. Center on Budget and Policy Priorities
What’s Next?
Low-Income Programs at Risk Again
• Policymakers have expressed desire to partially or
fully shield defense spending from sequestration
• Congress could make changes to the BCA to shift
where cuts fall
• Only additional revenues should be allowed to
reduce defense cuts under sequestration
• Other risks from proposals to block grant key
entitlement programs – like SNAP and Medicaid
cbpp.org
14
15. Center on Budget and Policy Priorities
What’s Next?
Fiscal Policies Collide at End of 2012
• 2001-2010 tax cuts expire at end of 2012
• Debt ceiling my need to be raised by early
2013
• $1.2 trillion sequestration scheduled to begin
in January 2013
• Key leverage comes from the tax cuts expiring
& the sequester (unless squandered)
15 cbpp.org
16. Center on Budget and Policy Priorities 16
What’s Next?
Policies for Deficit Reduction
• Ensure a balance of spending cuts and
revenues in a comprehensive budget plan
• Gradually let 2001-2010 tax cuts expire, or pay
for extension for low and middle income
• Reduce inefficient, regressive tax subsidies
• Control system-wide health cost growth
• Ensure deficit reduction does not increase
poverty or income inequality
cbpp.org
cbpp.org
Notas do Editor
Here you can see federal outlays, or spending, for FY 2010. What’s clear from this chart is that most direct federal spending is on popular and effective insurance programs and on defense.Let me note that this chart leaves out spending through the tax code, which is actually quite significant,Let’s look more closely at the two major categories that you may be most unfamiliar with, “non-defense appropriations” and “Other Entitlement Programs.” Let’s start with “Other Entitlement Programs,” which represented 14% of federal spending in FY 2010.
This category includes unemployment insurance—5 percent of federal spending--and several major anti-poverty programs, including SNAP, formerly food stamps. and the refundable portions of the Earned Income Tax Credit and Child Tax Credit, and SSI, a key income support program for people who are elderly, disabled, blind, and needy. These percentages were higher than usual in FY 2010. After the recession, these programs will not grow faster than the economy.Other includes TANF, SSBG
Low-income programs composed a little more than one-fifth of this category, including job training, rental housing assistance, the Community Services Block Grant, education funding, and some nutrition, health and social services funding. The other categories, like “health” exclude low-income programs. Now that we have some sense of where our tax dollars go, let’s look at our debt and deficit situation. It’s useful to ask how we got into our current fiscal situation where we forecast debt held by the public to grow unsustainably as a percentage of the economy.------------------------------------------------------
First, discretionary spending cuts under the BCA are now already in place, through caps, for security spending and for non-security spending, through 2013.-------------------------------Second, the BCA established the now failed Supercommittee.-------------------------------Failure of Supercommittee triggered sequestration—or automatic cuts--which we’ll discuss later in more detail. Importantly, these automatic cuts are split 50-50 between defense and non-defense spending. These cuts will not go into effect until January 2013. The Supercommittee’s failures also sets up new firewalls for discretionary budget cuts between defense and non-defense categories from 2013 through 2021, so that non-defense cuts cannot be substituted to protect defense spending under the law as enacted.-------------------------------
But first, let me point out that sequestration exempts all low-income individual entitlement programs. This was a remarkable success, as Republicans fought hard to ensure that programs like Medicaid were NOT exempt from the automatic cuts.------------------------------------------------(Mandatory programs that are not exempt include SSBG and Child Support Enforcement)
What is other mandatory spending – yellow bar – here? Mandatory programs in federal budget terms that are NOT exempt from sequestration – examples?SSBG and CSE
First, discretionary spending cuts under the BCA are now already in place, through caps, for security spending and for non-security spending, through 2013.-------------------------------
So, if Congress chooses to limit defense cuts, this protection should be paid for by additional revenues, not by additional cuts to non-defense or low-income entitlement programs.We should pay for our national security needs, and not shield defense spending at the expense of other priorities.-----------------------------------------
There may be significant leverage at end of 2012, i.e. next year, depends on not giving away defense sequester and the 2001-2010 tax cuts—we need to keep people off of bills next year that would lock-in these tax cuts. And it also depends on what offsets are used for things like the Medicare Doctor’s “fix”, the payroll tax cut extension, and unemployment insurance extension. Policymakers are looking at cuts to low-income and non-defense appropriations programs now, but enacting these cuts now will not inoculate these programs from being cut further as we search for another $3 trillion of deficit reduction over the coming decade.---------------------------------------don’t let Congress give these up before the Lame Duck session!
To sum up, policymakers would ideally take these four steps.Ideally, we would combine job creation initiatives in the short term, followed once the economy strengthens by tax increases and spending cuts that spare low-income and other vulnerable people from harm.----------------------------------