Sequestration has gone into effect! It is a reality. What does it mean, and why did it become necessary?

The simple answer to the last question is that in August 2011 a deal was made, allowing the federal government to borrow money to continue paying the bills it had already accrued.  The Budget Control Act (BCA) was put into place. It did two BIG things:

• Set spending caps for discretionary spending area for ten years

• Required Congress to find ways to save an additional $2.5 trillion over the same period. If it didn’t, there would be dire consequences – known as “sequestration.” Funds would be sequestered from (almost) all spending areas, across the board, with no attention to what is most necessary, what preserves life and dignity of persons.

Congress did not do the job so the dire consequences are with us.  Most of us have yet to feel them, but that will come.

But, how did we get to the point of needing to make such cuts?  A better, more interesting explanation than what I would give is found here. Take a look. Think about and evaluate what you hear on the news, or see in papers. Is it true, what some members of Congress say, that we spend too much on non-defense programs, which help people? The non-defense discretionary spending has gone from a mere 16% of the federal budget to an even smaller 14% over the last five years.

At NETWORK, we keep saying:

• We need increased revenues.

• We need to protect those at the margins.

• We need to reduce out-of-control spending by the Pentagon, remembering that 41% of all weapons spending in the world is by the United States.

For more information, click here.

On Tuesday, March 12, Rep. Paul Ryan released the Republican FY14 Budget proposal: The Path to Prosperity, A Responsible Balanced Budget. It is difficult to see how it is either balanced or responsible.

As the New York Times noted in today’s editorial, this budget is nothing more than “a retread of ideas that voters soundly rejected, made even worse, if possible, by sharper cuts to vital services and more dishonest tax provisions.”

Also, as Ezra Klein points out in today’s Washington Post: “Here is Paul Ryan’s path to a balanced budget in three sentences: He cuts deep into spending on health care for the poor and some combination of education, infrastructure, research, public-safety, and low-income programs. The Affordable Care Act’s Medicare cuts remain, but the military is spared, as is Social Security. There’s a vague individual tax reform plan that leaves only two tax brackets — 10 percent and 25 percent — and will require either huge, deficit-busting tax cuts or increasing taxes on poor and middle-class households, as well as a vague corporate tax reform plan that lowers the rate from 35 percent to 25 percent.”

Rep. Ryan claims to balance the budget within 10 years while lowering tax rates. He admits that some of this is due to the already-in-place tax increases on those earning more than $400,000 per year, which he STRONGLY opposed, and more of it is due to repealing (not reducing) the Affordable Care Act. Medicaid would become a capped block grant program –which would result in denying healthcare to at least hundreds of thousands of persons who have no access to insurance, thus increasing the real costs of healthcare by their use of emergency rooms for common ailments. Medicare would have means-tested premiums for high-income seniors, and workers born in 1959 or later would enter a private Medicare Exchange with a premium support provided beginning in 2024. Supplemental Nutrition Assistance Program (food stamps) would be given over to the states in a block grant, and a federal mandate would call for time limits and work requirements.

In his totals, spending would be about $50 billion less than under sequestration! Discretionary spending would total $966 billion, which is $92 billion below the $1.058 trillion cap established by the 2011 Budget Control Act. There are no stated provisions to accommodate the needs of children, the elderly and those with physical or emotional restrictions on their ability to work.

NETWORK strongly opposes each of the above proposals as they create untenable situations for those struggling to survive economically.

President Obama, in his FY2014 Budget Request, aims to prime the economy to the benefit of all of us. His budget invests in what is necessary for the nation to have a strong future:

–        Repair of long-neglected infrastructure including schools, bridges and roads

–        Development of manufacturing innovation institutes

–        Increase of nondefense research and development

–        Education and job training to prepare people in the above areas, including “Preschool for All”

–        Investment in clean energy, creating an Energy Security Trust, encouraging states to cut energy waste, modernizing the energy grid and making permanent the tax credit for renewable energy production

NETWORK supports these elements, and applauds the President for making these improvements while cutting the federal deficit. Many of the proposals demonstrate a concern for the middle class and low-income families, echoing NETWORK’s call for a respect of the dignity of work and workers.

At a time when the Supplementary Nutrition Assistance Program (SNAP) is challenged by the Farm Bill and in the House budget proposal, NETWORK is extremely supportive of the President’s holding the line on SNAP funding. This is known to be the most efficient of government programs, ensuring adequate nutrition to millions of Americans and providing economic benefit to neighborhoods, as each dollar in SNAP benefits turns over $1.78 in commerce.

However, as in any budget, NETWORK raises attention to significant concerns. In an attempt to compromise with House opponents, the President has included use of the “Chained CPI” a formula which changes the way federal benefits and certain provisions of the tax code are adjusted for inflation. Over time, this would, in effect, reduce benefits to recipients of Social Security and various veterans’ benefits. The longer a person receives benefits, the greater the reduction. The President refers to protections for the most elderly, and for those with the greatest need. Details of this are yet to be seen.

The President also suggests increasing Medicare premiums for the wealthiest in the nation. NETWORK is concerned for the future impacts means-testing could have on future Medicare support in Congress. NETWORK does, however, laud contracting for better prices on pharmaceuticals for Medicare.

NETWORK also has mixed reaction to the tax proposals in the President’s budget. We are very grateful for the retention of the ARRA improvements to the Child Tax Credit (CTC), the Earned Income Tax Credit(EITC). We support making permanent the American Opportunity Tax Credit, the CTC and EITC.

We laud the President for including the Buffett Rule, requiring households with incomes over $1 million to pay more in taxes, and for closing many loopholes by which those with the greatest wealth are eluding portions of their dues to society.

However, it is unfortunate that savings from this is used to lower corporate tax rates rather than for supporting the many unmet needs of the nation.

Finally, President Obama calls for a raise in the minimum wage to $9/hour – one step closer to achieving a living wage. These changes will make it easier for workers to be rewarded for their effort by having a decent life for themselves and their families. The President’s budget proposal indicates a shift towards greater concern for the middle class and working families.

The changes proposed in President Obama’s FY 2014 budget are a step in the right direction for lessening the economic disparity between the wealthy few and average Americans. NETWORK applauds these efforts to promote meaningful work and to ensure that Americans can invest in their families’ future.

Further study of the FY2014 budget will be reflected as implications are recognized.

President Obama, in his FY2014 Budget Request, aims to prime the economy to the benefit of all of us. His budget invests in what is necessary for the nation to have a strong future:

• Repair of long-neglected infrastructure including schools, bridges and roads
• Development of manufacturing innovation institutes
• Increase of nondefense research and development
• Education and job training to prepare people in the above areas, including “Preschool for All”
• Investment in clean energy, creating an Energy Security Trust, encouraging states to cut energy waste, modernizing the energy grid and making permanent the tax credit for renewable energy production

NETWORK supports these elements, and applauds the President for making these improvements while cutting the federal deficit. Many of the proposals demonstrate a concern for the middle class and low-income families, echoing NETWORK’s call for a respect of the dignity of work and workers.

At a time when the Supplementary Nutrition Assistance Program (SNAP, usually known as food stamps) is challenged by the Farm Bill and in the House budget proposal, NETWORK is extremely supportive of the president’s holding the line on SNAP funding. This is known to be an extremely efficient government program, ensuring adequate nutrition to millions of Americans and providing economic benefit to neighborhoods, as each dollar in SNAP benefits turns over $1.78 in commerce.

However, as with any budget, NETWORK has significant concerns. In an attempt to compromise with House opponents, the president has included use of the “Chained CPI,” a formula that changes the way federal benefits and certain provisions of the tax code are adjusted for inflation. Over time, this would, in effect, reduce benefits to recipients of Social Security and various veterans’ benefits. The longer a person receives benefits, the greater the reduction. The president refers to protections for the most elderly, and for those with the greatest need. Details of this are yet to be seen.

The president also suggests increasing Medicare premiums for the wealthiest in the nation. NETWORK is concerned about the effects means-testing could have on future Medicare support in Congress. NETWORK does, however, laud contracting for better prices on pharmaceuticals for Medicare.

NETWORK also has mixed reaction to the tax proposals in the president’s budget. We are very grateful for the retention of the ARRA improvements to the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC). We support making permanent the American Opportunity Tax Credit, the CTC and EITC.

We laud the president for including the Buffett Rule, requiring households with incomes over $1 million to pay more in taxes, and for closing many loopholes by which those with the greatest wealth are eluding portions of their dues to society.

However, it is unfortunate that savings from this are used to lower corporate tax rates rather than for supporting the many unmet needs of the nation.

Finally, President Obama calls for a raise in the minimum wage to $9/hour – one step closer to achieving a living wage. These changes will make it easier for workers to be rewarded for their effort by having a decent life for themselves and their families. The president’s budget proposal indicates a shift towards greater concern for the middle class and working families.

The changes proposed in President Obama’s FY2014 budget are a step in the right direction for lessening the economic disparity between the wealthy few and average Americans. NETWORK applauds these efforts to promote meaningful work and to ensure that Americans can invest in their families’ futures.

Further reflections about the FY2014 budget will come as implications are recognized.

Tomorrow, NETWORK will receive a volunteer who has been a government mailroom clerk since 1997. He has received awards for his dedication, never missing a day of work even in the midst of the 9/11 attack and anthrax scares. Having been furloughed since the government shutdown began last Tuesday, he said he is relieved to have work tomorrow, even though it is unpaid. He will use his mailroom skills to help us sort thousands of immigration advocacy postcards by zip code and Congressional district.

While the impasse in Congress seems baffling to most Americans, this NETWORK volunteer is actually incapable of understanding reasons for the government shutdown or that the dispute involves dismantling the Affordable Care Act. Yet, his livelihood and his life depend on both. Like many of his colleagues in the mailroom, he has a disability (autism) and other health issues that would cause him to be denied health insurance because of “preexisting conditions.”

Congress needs to hear more stories like the one above.Please share your story with us. We will collect and share them with Congress. You can also email us your story or picture(s) at [email protected]

NETWORK approaches today’s House vote on the passage of a new five-year Farm Bill with mixed feelings. We commend Congress for reaching a bipartisan agreement that avoided the absolutely unconscionable cuts to nutrition assistance proposed under the House-passed Nutrition Reform and Work Opportunity Act of 2013, which proposed nearly $40 billion in cuts over the next 10 years to the Supplemental Nutrition Assistance Program (SNAP). Still, as people of faith, we must speak out against the mentality that this compromise seems to embody and which frighteningly continues to appear in Congress’ legislative agenda.

At NETWORK, we realize the need for our nation to have responsible programs that work effectively and spend our tax dollars wisely. We recognize the need to rein in deficit spending and to get our national debt under control. However, we wholly denounce the idea that in order to do so, we must look to our nation’s vital safety-net programs for savings. Congress continues to approach programs that successfully lift folks out of poverty as a piggy bank for deficit reduction and for funding other programs. This attitude not only harms the most vulnerable among us, but it ignores true government waste in other arenas and the need for tax reform that generates reasonable revenue.

This year, we commemorate the fiftieth anniversary of President Lyndon Johnson’s proclamation of an unconditional “War on Poverty.” While our efforts as a nation have effectively halved the rate of poverty in America, there is still much work to be done. Congress should be prioritizing programs that protect the poorest among us as well as seeking to end the structural problems that marginalize people every day, not incessantly attempting to pare back the safety net. Beyond the safety net, Congress should be actively working to create jobs, repair our crumbling infrastructure, and ensure that everyone – corporations included – contributes to our continued prosperity.

Throughout his ministry, Jesus never ceased to proclaim the message that we will be judged by how we cared for people considered the least among us. Pope Francis continues to echo Jesus’s call, and reminds us all to seek creative solutions to end the structures that cause hunger and poverty. We urge all members of Congress to heed the call of the Gospel, to protect the safety net we have, and to proactively work to end hunger.

Those who oppose the Affordable Care Act may continue to misrepresent this week’s CBO report’s findings so it is important to let people know the truth. The report is clear about individuals being freed up to leave the workforce, look for other work, or start a business while not worrying about healthcare coverage. Many of these choices may be related to qualifying for health insurance subsidies. But employers pass on the costs of doing business – e.g. payroll taxes – to employees all the time. Why should employees not make enlightened decisions? And the increased demand for labor will reduce unemployment and raise wages.

Here are the facts:

The findings in the economic report released on February 4, 2014 by the nonpartisan Congressional Budget Office (CBO) that the Affordable Care Act (ACA) will shrink the workforce by more than 2 million full-time positions by 2021 touched off another round of political warfare over the ACA. Top Republicans pointed to the CBO analysis as further evidence the health care law was a “job killer.” As Chairman of the House Committee on the Budget, Paul Ryan said, “…Obamacare is only making things worse…CBO says the law will push 2.3 million people out of the workforce and will insure far fewer people than previously expected.”

However, the CBO’s projections are much more complicated than the criticism leveled by GOP lawmakers. In addition, the report is filled with caveats that critics are quick to overlook, such as on page 118 (such remarks are widespread and on nearly every page): “CBO’s estimate of the ACA’s impact on labor markets is subject to substantial uncertainty…” The estimated reduction of workers stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor.

The report was clear that the reduction in employment would occur not because of a crippling impact on private-sector job creation. Rather, some workers may choose to work fewer hours to qualify for health insurance subsidies, but at the same time some people may choose to work more hours as a result of the ACA’s provisions. For example, in the 25 states and the District of Columbia that have chosen to expand Medicaid, people qualify for Medicaid who make up to 138% of the federal poverty level (FPL), whereas prior to 2014, the median income threshold for Medicaid eligibility was 64% of the FPL (albeit with substantial state-to-state variation). Many people may choose to increase their hours of work while remaining eligible for subsidized insurance.

Much of the media initially – and incorrectly – reported the 2.3 million figure as “job losses.” That figure would not take a toll on the unemployment rate, since those working less would generally be doing so voluntarily. Even Paul Ryan, during the February 4 hearing on the report asked CBO Director Elmendorf: “Just to understand, it is not that employers are laying people off?” Elmendorf responded: “That is right.” The key here is that people will have more choices when it comes to employment and how much they’ll work, not on businesses cutting back on jobs. White House Press Secretary Jay Carney emphasized that “individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years or choosing to spend more time with their families.”

The report itself states that there is “no compelling evidence that part-time employment has increased as a result of the ACA.” This responds to one of the most common warnings from small business lobbyists concerning the ACA. Nor does the report take into account the potential impact that ACA’s slowing of health care costs will have on the economy, which some experts have estimated could add between 250,000 and 400,000 jobs to the economy by the end of the decade. Representative Chris Van Hollen (D-MD) also noted that the CBO report projects the health care law will boost demand for goods and services over the next few years, increasing the demand for labor (or reducing unemployment, as Elmendorf verified in the February 4th House hearing on the CBO report).

The Progress Report (February 5, 2014) from the Center for American Progress gives three important reasons why the CBO report is positive news for the ACA:

• Individuals are no longer trapped in their jobs because of health coverage. They have the same options as people with higher incomes have always had.
• The unemployment rate will actually decrease. The ACA will boost overall demand for goods and services because the people who benefit from the expansion of Medicaid and from access to the exchange subsidies are predominantly in lower-income households and thus are likely to spend a considerable fraction of their additional resources on goods and services. This increase has a multiplier effect and will lead to greater employment.
• Wages will increase. If the 2.3 million person reduction in the workforce by 2021 due to people choosing either not to work or to reduce their hours becomes a reality, then wages will be raised because of an increased demand for labor.

cursus.

On Tuesday, March 4, President Obama will release his budget request for FY15. What do you need to listen and watch for on the news? Compare President Obama’s budget to a Faithful Budget.

–          Defense Spending – Secretary Hagel released the defense budget he sent to the President. It cuts overall defense spending – by cutting many of the wrong things: military healthcare premiums and military housing assistance. He increases the “Overseas Contingency Operations” fund – meant for unexpected expenses on the ground during war – which is less monitored than any other funding. A Faithful Budget would prioritize taking proper care of our men and women who have served our country, and reducing our over-sized military force. What will the President say about military spending?

–          Social Security and other mandated programs – A Faithful Budget ensures that all who age in this country can do so with dignity. If there are reductions, who will pay the price of those? How firm will the President be on not instituting the “chained-CPI” for these programs?

–          Medicare – A Faithful Budget ensures that dignified access to quality healthcare is possible for all. What will the President propose on means-testing for Medicare?

–          Refundable tax credits – A Faithful Budget includes reasonable revenue for responsible programs such as the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC). Will the President recommend making permanent the 5-year improvements to the CTC and EITC?

–          Tax havens – A Faithful Budget honors the principle “for those to whom much has been given, much will be required” (Luke 12:48). What will be in the budget to restrict corporations’ hiding of profits offshore to avoid payment of taxes?

–         New Spending Priorities – We have heard about $56 billion in new spending for a “Opportunity, Growth, and Security Initiative.” A Faithful Budget would invest in maximizing our human potential and stewarding God’s Earth. How will the President propose these new funds be used in both defense and non-defense areas?

The Senate has decided NOT to prepare a budget for FY15, as spending levels are already designated, and appropriations can go on. The House WILL do a budget – it will be a message piece – watch for it in a few weeks.

The House of Representatives is faced with a moral decision when asked to vote on alternative budget proposals as early as next week. Given that neither proposal will gain any traction in the Senate, both are messaging pieces setting the tone for mid-term elections.

The moral question for a legislator is: do I vote in favor of a budget proposal that further supports the rich and powerful – who fund election of candidates who further the narrowing of wealth and power? Or do I vote for a budget that provides millions of jobs, is responsible to repairing the crumbling infrastructure constructed by generations before us in order to leave a safe environment for next generations, and giving hardworking people living in poverty an opportunity to share in the immense wealth held in this nation?

The two budget proposals currently before members of the House present a stark contrast between these two stances. The Congressional Progressive Caucus released its BETTER OFF BUDGET a week ago and the House budget committee, under the guidance of Representative Paul Ryan released THE PATH TO PROSPERITY 2015 on April 1. What an appropriate date for such a document, as any reference to support of the common good is a joke.  These two proposals and the president’s request can be seen in a side-by-side chart at http://nationalpriorities.org/analysis/2014/budget-proposals-2015/

In each category, the BETTER OFF BUDGET is a match to the priorities held by NETWORK, A National Catholic Social Justice Lobby. NETWORK strongly supports the BETTER OFF BUDGET. It is astounding to think that the House Republican budget puts no funding into creating jobs – adding to the rolls and cost of antipoverty programs, and lowering morale among our young people.  According to “The New Battleground Poll” (Lake Research Partners), this is a major issue keeping young adults from bothering to vote as they admit to being cynical toward politics and unmoored from institutions. Jobs are key for this population to again engage with the nation. This Ryan budget targets their job potential by eliminating almost 50 job-training programs, imposing an income eligibility cap for Pell Grants, ending funding for part-time students, and capping awards at $5,730.

The Ryan budget jeopardizes the development of our children in other ways as well. Their access to nutritious food will be less as SNAP becomes a block grant with $23 billion in cuts. Cash assistance programs that allow low-income parents to work by providing child care, transportation, and other assistance will be slashed by $125 billion over the ten years. And the Community Development Block Grant will be eliminated – further reducing assistance for needs of families with children who are struggling.

Our seniors with moderate to low means will face increasing difficulties if any of Congressman Ryan’s proposals go into effect for them. Medicare will become a voucher program, with more than half the $5.1 Trillion in savings coming from healthcare (Medicare, Medicaid and the Affordable Care Act).

All-in-all, this budget is damaging to young people (our future), our elders (who helped us get where we are), and anyone who has been unable to become a part of the wealthiest elite in the nation.

The Inter-Religious Working Group on Domestic Human Needs feels compelled to respond to the budget released by the House Budget Committee – headed by Rep. Paul Ryan. Again, we are horrified by the damage it would do to individuals and families struggling to survive economically. These same households have borne the brunt of budget cuts, and sequestration cuts over the last several years. Most safety net programs have seen a 20% reduction in funding, while prices and need continue to escalate.

Over the next couple of weeks, pieces will be done on seven areas of discretionary funding. These are being placed on the group’s website and on the websites of several of the member organizations (see below), and they are being sent to members of Congress. It is critical that those who vote for appropriations, as well as on the overall budget, understand the impact of their decisions on the lives of real families and individuals.

We are confident that this budget will not be accepted and signed into law. However, the proposals will have influence on members of Congress as they appropriate funding, and as they propose and mark up authorizing legislation. We need to be sure that as they continue their work, they are keenly aware of decisions that inflict harm.

First Guest Blog:

By Ryan Murphy, Sisters of Mercy of the Americas

Last week, the House Budget Committee officially released its 2015 budget resolution, entitled: The Path to Prosperity. Although the document is merely symbolic due to the bipartisan budget agreement reached last month between House and Senate, it is an important indication of what could emerge from Congress in the near future. According to Congressman Paul Ryan, the Chairman of the House Budget Committee and key author of the document, “this budget is our vision for how we should fix this country’s fiscal problem.”

Tragically, from the perspective of the Sisters of Mercy of the Americas, this vision doesn’t address the best interests of the American people.

The proposed “path to prosperity” “seeks to equip Americans with the skills they need in a 21^st century economy;” yet it subsequently suggests slashing education programs for millions of children in low-income families. Since the impact of the Great Recession will likely continue over the next decade, it’s not logical to dismantle the ladder of opportunity for our less fortunate children.

For over 150 years, the Sisters of Mercy have provided a quality education throughout the country at our primary schools, high schools, colleges and universities. As educators, we know our country’s prosperous future demands meeting the educational needs of our next generation. The House Budget Committee’s vision would diminish funding for educational programs to an unprecedented level. The next 10 years would see a cut of $791 billion in non-defense discretionary spending, jeopardizing the limited resources for a variety of government programs, including Head Start, Early Head Start and Child Care and Development Block Grant. By 2024, non-defense discretionary spending would be capped at 1.7 percent of the GDP, roughly half of its historic level.

The future success of many children in the United State depends on the early education they receive in both Early Head Start and Head Start. These programs strengthen their verbal, social, and emotional development, giving them the foundation they will need for their academic careers. In 2012, the most recent year for which numbers are available, nearly a million children were enrolled in Head Start, while another 151,000 were enrolled in Early Head Start. Sixty percent of the families with children in either program were headed by single parents. The House Budget Committee failed to recognize the inherent value of enabling these parents to hold a job while improving the development of our next generation.

Last year due to the federal sequestration, funding for Head Start and Early Head start was reduced by five percent. The impact of this cut meant 57,000 children were denied enrolling in these programs. Furthermore, 18,000 Head Start employees were either laid off or experienced a pay decrease. If a five percent reduction in funding could do so much damage, imagine the possible implication of this proposed budget. What would that mean for the development of our next generation if up to half of Head Start’s and Early Head Start’s funding was redirected to tax breaks and military spending?

Other programs, such as the Child Care and Development Block Grant, would face a threat of complete elimination under this budget. Under this program, 1.6 million children are able to attend day care while their parents go to work. Eighty-six percent of the families served by the Child Care and Development Block Grant are low-income signal-parent’s homes. What would it mean for these families to no long have access to day care? Imagine the impact it would have on their parent’s ability to hold a job?

A child has no choice in the economic status of the family she/he is born into or the capacity for moving up the economic ladder. Moreover, children play no role in contributing to the “country’s fiscal problem.” Why then is the House Budget Committee suggesting children in low-income families make the sacrifice? The sad fact is that these children will already face a disproportionate number of challenges their peers from middle class and wealthy families will never fathom. If we truly intend “to equip Americans with the skills they need in a 21^stcentury economy and to create job,” we need to preserve and expand access to a quality education for all Americans, regardless of their families’ economic status.