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2012 Federal Budget Outlook NIHB January 24, 2012 Joan Huffer Center on Budget and Policy Priorities 1 Federal Debt Under Current Policies is Unsustainable cbpp.org 7/17/2015 NOT FOR DISTRIBUTION 2 Tax Cuts, Wars Account for Half of Public Debt by 2019 7/17/2015 3 Ryan plan would get two-thirds of cuts from programs for low- and moderate-income people Source: “The Path to Prosperity” FY2012 Budget Resolution 4 Deficit Reduction Under the Budget Control Act 1. Cuts discretionary spending by $1 trillion over 10 years through caps on discretionary spending. 2. Set up bipartisan, bicameral Joint Select Committee to identify additional $1.5 trillion in savings. Failed to reach agreement. 3. $1.2 trillion in across-the-board cuts (sequestration) begins January 2013 unless Congress acts. cbpp.org 7/17/2015 5 Supercommittee Failure Triggers Sequestration 7/17/2015 6 Sequestration Means Deep Cuts Throughout Budget 7/17/2015 7 Sequestration will be on TOP of Discretionary Caps 7/17/2015 8 Core Low-Income Entitlement Programs Exempt from Sequestration $1.2 trillion across-the-board spending cuts will not affect: • Medicaid and Children’s Health Insurance Program • Supplemental Nutrition Assistance Program (Food Stamps) • Child Care Entitlements (mandatory) • Child Nutrition • Earned Income Tax Credits (EITC), Child Tax Credit (CTC), ACA Premium Credits [but NOT cost-sharing subsidies] • Supplemental Security Income (SSI) • Temporary Assistance to Needy Families (TANF) 7/17/2015 9 Short-term threats • UI benefits, weeks could be cut back • Cuts to health care programs to pay for SGR • Shielding defense from sequestration without revenue savings could lead to: - Loss of exemption for some low-income programs - Increased cuts to NDD 10 Fiscal Policies Collide at End of 2012 • 2001-2010 tax cuts expire at end of 2012 • $1.2 trillion sequestration scheduled to begin in January 2013 • Debt ceiling may need to be raised by early 2013 • FY2013 Appropriations bills may or may not be completed 11 Principles for Deficit Reduction • Balance primary budget, stabilize debt to GDP. • Need a balanced approach: everything must be on the table • Should not increase poverty or inequality • Boost economy in short-run cbpp.org 7/17/2015 Past Deficit-Reduction Packages Included Large Revenue Increases 13 Taxes Do Not Necessarily Harm the Economy or Cost Jobs 14 Helpful Resources • Office of Management & Budget (OMB) – www.whitehouse.gov/omb • U.S. Senate Budget Committee – http://budget.senate.gov • U.S. House Budget Committee – http://budget.house.gov • Congressional Budget Office (CBO) – www.cbo.gov • THOMAS – Library of Congress – http://thomas.loc.gov • Center on Budget and Policy Priorities – www.cbpp.org