Coalition on Human Needs Statement: the Budget Control Act

Washington, DC:  The Coalition on Human Needs released this statement by Deborah Weinstein, Executive Director:

What the nation needs from Congress and the Administration is a plan to create jobs and stop the economy’s downward slide.  What we’ve gotten is a manufactured crisis over the federal authority to borrow, and a solution to that crisis that will lead inevitably to more harm to low- and moderate-income people.

The price of allowing the federal government to pay its bills will be more than $900 billion in cuts over the next ten years, followed by another $1.5 trillion in budget reductions to be determined by a new joint committee of Congress.  If Congress does not enact the joint committee’s recommendations, automatic cuts will take effect.  The joint committee can recommend new revenues as part of its deficit reduction plan.  But based on the failure by both parties to end upper-income tax cuts a year ago and the intransigence of right-wing members now, we know that it will be a difficult struggle, to say the least, to include new revenues in the plan.

Despite the difficulty, revenues must be part of the nation’s deficit reduction strategy.  It is unconscionable and damaging to the economy for millionaires and billionaires to continue to rake in hundreds of billions of dollars while children, seniors, people with disabilities, the unemployed and uninsured get less health care, food, education, and other essential services.

The Coalition on Human Needs recognizes that failure to adopt the Budget Control Act may inflict even worse harm to many millions of Americans.  We cannot predict the impact on the economy, but it is easier to predict that prolonged negotiations to raise the debt ceiling will result in more cuts and fewer protections for low-income people.

The Budget Control Act includes some important provisions that reduce the threats to vulnerable people.  The first round of more than $900 billion in cuts will include about $350 billion in reductions to military spending, assuring that education, nutrition assistance, children’s services, affordable housing, home energy aid, as well as environmental protection and many other domestic needs do not bear the full brunt of the cuts.  In addition, if automatic cuts are triggered, half the reductions will come from military accounts, and essential low-income programs will be exempt.  These protections are necessary, but they are not sufficient.

The Budget Control Act propels Congress towards a set of choices, leaving the details to future legislative battles.  The Coalition on Human Needs will redouble its efforts to fight cuts that endanger young and old alike and that prevent people from achieving economic security.  We will continue to work for fair and adequate revenues to protect people now and invest in our future.

National Women's Law Center Statement On Debt Ceiling Deal
August 01, 2011

(Washington, D.C.)  Last evening President Obama and congressional leaders agreed to a deal to raise the federal debt limit that includes steep spending cuts but no new taxes.  This agreement follows several weeks of a partisan impasse that pushed the country to the brink of a government default.

The following is a statement by NWLC Co-President Nancy Duff Campbell:

“For months, far-right Members of Congress have been threatening to force the U.S. to default on its obligations unless Congress enacts devastating cuts to programs that are vital to women and their families. The debt ceiling deal averts the disaster of default but at a painful and unfair price. The deal would cut domestic discretionary programs – programs such as Head Start, K-12 education, Title X family planning, job training, domestic violence prevention, meals-on-wheels and other services for vulnerable people – by hundreds of billions of dollars but not touch a penny of the tax breaks enjoyed by millionaires and corporations.      

“In addition to the nearly $1 trillion in cuts to defense and non-defense programs over the next ten years, the deal would create a new congressional committee to propose an additional $1.5 trillion in deficit reduction by this November. That committee will have the authority to consider cuts to all spending programs, including Medicare, Medicaid, Social Security and Food Stamps, and revenue increases to help reduce the deficit. Though House Speaker John Boehner has already said that the House will not consider any tax increases on anyone, he should not be allowed to prevail.

“The congressional committee’s recommendations will be put to a vote in Congress by the end of this year; if Congress fails to enact sufficient reductions, automatic spending cuts would take effect beginning in 2013. While the automatic cuts would exempt a number of key safety-net programs, including Social Security, Medicaid, SNAP (food stamps), discretionary programs for vulnerable people would be subject to additional, devastating cuts.   But tax subsidies and tax breaks would not be touched by these automatic cuts.

“This deal will weaken an already anemic economic recovery. For the millions of women and men who are still struggling to find jobs and already suffering from deep cuts in public services, the fact that this deal could have been worse provides little comfort. Americans deserve better.

“All those who care about the vulnerable among us should stand up and fight to ensure that Congress takes a more balanced approach to the deficit and makes job creation a higher priority in the months to come.”

Statement by EPI President Lawrence Mishel on the proposed agreement to raise the debt ceiling:

The Context

This proposed debt ceiling deal tentatively concludes a needlessly manufactured crisis and will do great harm to our nation. The debt we are undertaking now and scheduled to undertake over the next ten years is solely the product of past decisions (primarily unfunded wars, an unfunded prescription drug benefit and two rounds of tax cuts under President George W. Bush) and the recession-related revenue losses caused by the financial crisis generated by financial deregulation and weak oversight. We should end the need to legislatively raise the debt ceiling, since debt decisions are already made when budget bills are passed, and we should hold our elected officials accountable for the budget decisions they make. There is no economic necessity to undertake spending cuts or deficit reduction plans at this point in the economic recovery, when high unemployment is expected to persist for several more years. Jobs should be the priority and jobs are the path to get our nation’s fiscal situation to a responsible place. A long-term deficit reduction at this time should only be done if coupled with substantial deficit-related supports to the economy to rapidly lower unemployment this year and next.

Tax cuts enacted last December account for roughly $800 billion (one-third) of the increased borrowing authority needed to maintain obligations to citizens and creditors through 2012; a two-year extension of all the Bush tax cuts is now being fully financed with deep spending cuts.

Phase One

The agreement calls for reductions in nominal (not inflation-adjusted) spending over the next two years which will only act to slow the recovery. Absent from this deal is any continuation of the Emergency Unemployment Compensation (for unemployment insurance benefits beyond the twenty-six weeks provided by most states) and the payroll tax holiday for 2012, both of which President Obama has stated he wanted. Forecasters now expect unemployment to be 8.0% or more at the end of 2012, with several (Economy.com, Goldman Sachs) forecasting 8.3%. The absence of the UI and payroll tax holiday provisions coupled with the new spending cuts guarantees an even higher level of unemployment than the dismal rates already expected.

The spending caps do not allow the budget to meet our nation’s basic needs for public investment, regulation and other domestic needs. The spending caps will reduce non-security domestic spending to just 1.8% of GDP in 2021, the lowest level since the 1950s and the amount we now spend on public investment. Thus, this spending level will not allow us to both maintain current levels of public investment and the normal functions for housing, criminal justice, regulatory enforcement and other needs.

Phase two

The debt ceiling compromise also charges a small bipartisan group of 12 members of Congress to propose $1.5 trillion (or more) in additional debt-reduction. If they agree on a package, the proposed legislation would be fast-tracked for a vote in both the House and Senate.

House Speaker Boehner has already suggested that the Republican delegation will be unwilling to support tax increases or revenue-raising tax reform.  If so, this would simply continue the one-sided approach to deficit reduction, and would place Social Security, Medicare and Medicaid benefits at great risk.  This is all the more true since domestic spending will already have been substantially reduced as part of the initial cuts.   Consequently, this new process is likely to lead to a very unbalanced fiscal policy approach.

If no agreement is reached, further cuts to spending will be automatically triggered, including cuts to defense and non-defense programs beginning in 2013. If triggered, those cuts would kick in while unemployment is between 8 and 9% and lead to higher unemployment and lower family incomes.

MASSIVE FEDERAL SPENDING CUTS WILL WORSEN ECONOMY

WASHINGTON – American Federation of Government Employees National President John Gage today issued the following statement in response to the debt limit deal announced Sunday by Congressional leaders and the White House:

“The manufactured debt crisis is over for now, but the real crisis looms larger than ever. More than 14 million Americans have lost their jobs, and this debt deal does nothing to get them back to work. In fact, these massive spending cuts will undermine our slow economic growth. As a result, more Americans will find it tougher to get a job. If this debt deal leads to a double dip recession, more Americans may be laid off.

“Federal agencies will have to cut $7 billion from their current budgets under the first phase of this debt deal. This could mean cutting tens of thousands of federal jobs like Social Security claims representatives, doctors and nurses at VA hospitals, Border Patrol agents and EPA scientists.

“More spending cuts are just around the corner, and this debt deal lays the groundwork for substantial cuts to vital federal programs like Social Security, Medicare and Medicaid. In the meantime, this agreement does nothing to roll back the Bush-era tax cuts that have benefited the wealthiest Americans and corporations. In fact, there is no guarantee that the government will generate any additional revenue under this debt deal.

“Right now America needs to focus on creating jobs and lowering unemployment, rather than cutting spending and undermining the economy.”