3.8 what’s at stake: federal policy decisions in 2012 and beyond
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3.8 What’s at Stake: Federal Policy Decisions in 2012 and BeyondSpeaker: Liz SchottThe 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.TRANSCRIPT
What’s At Stake: Federal Budget Decisions in 2012 and Beyond
Liz SchottSenior Fellow, Family Income Support
Nat. Conf. to End Family and Youth Homelessness
Los Angeles, CA, February 2012
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Federal Budget 101
What Just Happened?
What Does This Mean?
What’s Next?
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FY 2010 Budget Mostly Defense and Popular Entitlements
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Safety Net Programs Compose “Other Entitlements”
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Non-Defense Discretionary Includes Important Low-Income Programs
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Economic Downturn and Legacy of Past Policies Drive Record Deficits in the Decade
Ahead
6Source: CBPP analysis based on Congressional Budget Office estimates.
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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.
Deficit Reduction under Budget Control Act (BCA)
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$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]
• Supplemental Security Income (SSI) and Temporary Assistance to Needy Families (TANF)
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Early Success Protecting Core Low-Income Entitlement Programs
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Sequestration Means Deep Cuts Throughout Budget
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Sequestration Means Deep Cuts Throughout Budget
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Sequestration Cuts are on TOP of Discretionary Caps
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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).
Congress DID Reduce the Deficit This Year!
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Low-Income Programs at Risk Again
What’s Next?
• 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
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Fiscal Policies Collide at End of 2012
What’s Next?
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• 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)
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Policies for Deficit Reduction
What’s Next?
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• 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
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