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New Plans for Deficit Reduction in the House - May 14 update

Updated May 14, 2012

On Thursday, May 10, the House of Representatives narrowly passed H.R. 5652, the bill to replace the really bad cuts to the safety net with even worse ones. The minimum number of votes to allow passage in the House is 218, and this vote was 218 – 119 (with 13 members not voting and one voting “present”). There is little likelihood that the bill will be acted on in the Senate, although the Ryan Budget on which it is based will be allowed to come to the floor. The Senate generally has a longer, more reasoned view than we are currently seeing in the House.

Economists speaking at a Brookings Institution forum (May 3, 2012) echoed what most economists have been saying since early in the recession.  The U.S. economy cannot become stable without additional revenue coming into the federal coffers.  This is due to the prolonged, expensive war in Afghanistan and Iraq; the aging of the population, and to the temporary tax gifts provided in 2001 and 2003 (mostly to the wealthiest among us).  As in a family, the government cannot provide for additional needs while reducing income.

In August 2011, in order to meet the challenge of approaching the debt limit, the House and the Senate agreed to raise the debt limit by $2.1 trillion, in stages. They also agreed to hold a vote on a balanced budget amendment to the Constitution of the United States (which failed in the Senate), and to set up a Joint Select Committee on Deficit Reduction.  This committee was charged with savings which exceed the increase in the debt limit.  The agreement was that if they were not successful, an automatic sequester (across the board cut) would be put into place, to become effective January 2013.  They were not successful.  Now, members of the House and the Senate, and the President in his Budget Request, are trying to find savings which would forestall sequestration. 

The House and the Senate continue to determine ways to reduce the deficit, and to extend the approach of next meeting the debt limit – expected to be in December of this year.  The Senate is taking an approach, through appropriations and with proposals for increasing revenue to provide enough savings to forestall the Sequestration, expected to go into effect on January 1, 2013.  The approach of the House is to secure savings solely through reigning in spending (mostly of programs supporting those who are most vulnerable), while providing even more money for the military and further expanding tax expenditures benefitting the wealthy and corporations.

The House of Representatives has proposed an FY2013 budget which cuts spending by $19 billion below what was agreed to in the Budget Control Act.  They are enacting this through appropriations based on reconciliation instructions to six committees:  Agriculture,  Energy and Commerce,  Financial Services,  Judiciary,  Oversight and Government Reform, and  Ways and Means.

Agriculture, Energy and Commerce, Financial Services and Ways and Means are committees which provide for most of the safety net programs.

Reconciliation calls for:

  • Supplemental Nutrition Assistance Program - cut of $36 billion in 2013, and moving it from a mandatory program to a block grant program
  • Eligibility changes through TANF or “Heat and Eat” - removes 280,000 children who will also lose school meals
  • Medicaid - becoming block-grant by 2016
  • Affordable Care Act

-elimination of “maintenance of Service” requirement, allowing states to deny eligibility or  create difficult to meet requirement

-prohibit funding to states for establishing health insurance exchanges

-rescind funding for loans for Consumer Operated and Oriented Programs

  • Consumer Financial Protection Bureau - capping annual budget to curtail monitoring of financial agencies used by low-income persons  (ATMs, short-term loan companies…)
  • Home  Affordable Mortgage Program (HAMP) - eliminated
  • Energy and Commerce subcommittee - increasing defense program funds at the expense of non-defense programs
  • Ways and Means Committee

-Social Service Block Grants (SSBG) eliminated, which fund states to cover child care assistance, child and adult protective services, Meals on Wheels,…

- Cut Child Tax Credit by $53 billion over 10 years. ($7.8 billion from families filing taxes using an  ITID Number, rather than Social Security Number – documented immigrants)

NETWORK strongly opposes the Reconciliation approach which further cuts assistance to low-income families and individuals.  Non-defense discretionary spending has, since August 2011, already been cut by $1 trillion. Most of this was reduction in funding to states to support programs such as Medicaid, social workers, fire fighters, police programs, nutrition programs and housing programs.