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Concern About Potential Budget Cuts in Congress

On January 25, H.R 38 passed in the House, allowing official spending allocations to be curtailed at 2008 levels for the remainder of the 2011 fiscal year. Appropriations and committee staffs will be expected to determine where cuts can be made, and those recommendations will be the foundation of a stopgap bill. If passed, that legislation will serve as the mechanism to fund the federal government for the remainder of fiscal year 2011. Majority Leader Eric Cantor, R-Va, announced that a bill funding the federal government for the remainder of the year is expected to come to a vote in the House the week of February 14,         

NETWORK is gravely concerned about proposed cuts that may be included in this upcoming legislation. For example, the Community Development and Block Grant (CDBG) would be eliminated if Republican Study Committee suggestions are implemented.

CDBG, begun in 1974, provides low- and moderate-income urban and metropolitan communities with the funds necessary to address numerous development issues. CDBG funds have allowed police officers in Columbia, South Carolina to obtain low-interest mortgages in the communities in which they serve. As a result of community policing, crime rates have fallen while property values have increased. Outside San Antonio, Texas, CDBG funds have been utilized to rehabilitate homes, build ramps for disabled residents and supply homes with plumbing and heating. In Scranton, Pennsylvania, CDBG funds were utilized to secure financing for the Lackawanna garage project. This project will create low- and moderate-income jobs for the people of Scranton.

Additional suggestions from the Republican Study Committee’s Spending Reduction Act of 2011 include the repeal of the 2010 Affordable Care Act, which would allow insurance companies to deny coverage for preexisting conditions once again, cancel insurance when one becomes ill, and deny insurance to children. These are among the bill’s benefits that are already in effect.

Recommendations of the Bowles-Simpson deficit commission (officially known as The National Commission on Fiscal Responsibility and Reform), a bi-partisan deficit panel called for by President Obama, strongly emphasized that while reducing the deficit is crucial to the long run vitality of the U.S economy, it is shortsighted to put these cuts into action in what remains a fragile economy. Unemployment remains stubbornly high—it was 9.4% during December. Moreover, the official rate of unemployment does not take into account those who have stopped looking for work, are underemployed seeking full time work, or have been unemployed beyond the number of weeks for which one is eligible for unemployment compensation.

It would serve the American people and Congress well to remember the consequences of decreased spending during the Great Depression. Rolling back spending in the 1930’s increased unemployment and significantly slowed the pace of economic recovery.

Members of Congress and the Administration need to take a hard look at the proven usefulness of past investment that limited further downturns in the American economy.

The Center on Budget and Policy Priorities (CBPP) analyzed the latest census data to examine the effectiveness of government spending to spur job growth and prevent further increases in poverty. While the stimulus package did not lower unemployment rates as significantly as expected, according to CBPP, the latest Census data  “indicate that the Recovery Act is one of the single most effective pieces of legislation at preventing poverty to be enacted in decades. No program other than Social Security and the EITC kept this many people above the poverty line in 2009.”

NETWORK supports balancing the need for deficit reduction with meeting obligations to our most vulnerable citizens. While we continue to experience high unemployment rates, we must continue to fully support individuals and families with social safety nets (such as full funding of the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families). These programs help recognize the human dignity inherent within each individual and enable people to gain the skills and educational experience necessary to obtain employment in modern society.