Transcript Lame Ducks, Grand Bargains, Punts and Cliffs NASBO Fall Meeting Friday, October 5, 2012 Alexandria, VA Federal Funds Information for States.

Lame Ducks, Grand Bargains, Punts
and Cliffs
NASBO Fall Meeting
Friday, October 5, 2012
Alexandria, VA
Federal Funds
Information for States
Where we Left Off in August: What’s
the Conventional Wisdom?
For appropriations, a CR until the election,
BUT…
 For BCA, agreeing to postpone the day of
reckoning, BUT…
 For expiring tax provisions, a bruising fight,
possibly informed by the election.
 For authorizations, probably nothing,
BUT...

Six-Month Continuing Resolution
Through March 27, 2013
 FY 2012 + 0.612% for most discretionary
programs (not highways)
 Mandatory programs: current-law level
 Extends SNAP, TANF, related programs
 Additional funds for a few programs

The BCA and the Sequester




Absent a legislated alternative, a sequester will occur on
January 2, 2013
Many mandatory and a few discretionary programs are
exempt
– OMB report sheds light on its interpretations
OMB estimates of ATB cuts: 8.2% (nondefense
discretionary), 7.6% (nondefense mandatory), 9.4%
(defense discretionary)
ATB reduction applied to FY 2013 funding in effect on
January 2, 2013 (CR level)
Lame Duck Possibilities
Policy
Grand Bargain
Punt
Cliff
FY 2013 Appropriations
Unclear
Leave for new Congress
N/A
BCA Sequester
Replace/modify
Extend deadline
Implement sequester
2% payroll tax
Probably extend
Extend
Expires
Bush-era rates
Maintain for <$250K
Extend
Expire
AMT
Permanent fix
Extend
Expire at their peril
Raise
Small increase
No agreement
Farm bill (nutrition after March)
Reauthorize or not
Extend
No agreement
TANF (after March)
Reauthorize or not
Extend
No action
Medicaid QI, TMA
Reauthorize or not
Extend
Expire?
UI EUC/EB
Reauthorize or not
Extend
Expire
Expiring tax provisions:
Debt Limit
Expiring legislation:
CBO Estimates the Fiscal Cliff
The Fiscal Cliff
$4,500
$4,000
$3,500
$ in billions
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
2011
2012
2013
2014
2015
Fiscal Year
Revenues
Expenditures
2016
2017
Sequester Coverage Status of
FFIS VIP Series Programs
33% Exempt
Both
3%
67%
Covered
Sequester Coverage Status of
FFIS VIP Series Funding
Covered
18%
Exempt
82%
Grand Bargain Revenue Options

Go after tax expenditures, including:
–
–
–
–


Itemized deduction for S/L taxes
Make S/L bond interest taxable
Curb or eliminate mortgage deduction
Curb or eliminate tax exclusion for employer-provided
health insurance
Changes in tax brackets, capital gains, AMT, etc.
Create federal sales tax or VAT
The “Other” Federal Spending: Tax
Expenditures
25 Largest Federal Tax Expenditures Cost $870 Billion in 2010
$180,000
$160,000
$140,000
$ in millions
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Grand Bargain Spending Options






Modify Medicaid’s financing structure; other
changes to mandatory programs
Statutorily limit health spending growth
More block grants (Medicaid and SNAP)
Consolidate programs (job-training)
Reduce/eliminate funding for select programs
(Pell grants, housing, abandoned mine payments)
Move all S/L workers into Social Security
What’s the Conventional Wisdom?



There is none!
For more information, visit:
www.ffis.org
Or contact:
Marcia Howard
[email protected]
Trinity Tomsic
[email protected]