The 2015 Bipartisan Budget Act and Low-Income People: A Welcome Down Payment on Needed Investments
On November 2, President Obama signed the Bipartisan Budget Act of 2015 into law, providing a framework for federal spending over this year and the next. This blueprint enables Congress to move to the crucial next steps by mid-December of deciding the details of a spending bill for fiscal year 2016 (FY 2016), while leaving important unfinished business to improve the lives of low-income people.
What’s In the Budget Blueprint?
Since 2011, federal spending on discretionary programs has been squeezed by caps established under that year’s deficit reduction deal. A wide range of programs affecting low-income people—including child care, Head Start, federal support to high-poverty schools, work-study opportunities for college students, job training, housing vouchers, services for homeless individuals and families, and meals on wheels for seniors—are all being squeezed by spending levels that fail to keep up with need.
The new budget law provides partial relief to these spending caps for federal fiscal years 2016 and 2017. The deal lifts the overall caps by $50 billion in FY 2016 (which began on October 1) and by $30 billion in FY 2017. In both years, the increase will be equally divided between defense and non-defense discretionary spending. This increase is paid for by a mixture of policies, including changes to farm subsidies, selling oil from our strategic petroleum reserve, and extending the across-the-board cuts on mandatory programs (primarily Medicare provider payments) further into the future. Additional funding for defense and homeland security activities will also be provided through an off-budget “overseas contingency operations” (OCO) fund that is not offset.
In addition, the new budget law temporarily suspends the “debt ceiling,” which limits the total amount of money that the U.S. government can owe, until March 2017. Without this flexibility, the Treasury would have been unable to pay federal workers, make Social Security and other benefit payments, provide grants to states, or make interest payments to bondholders. The law also makes the Social Security Disability Insurance (SSDI) program solvent through 2022 and prevents Medicare beneficiaries from facing sharp increases in their premiums.
To put the funding levels in the new budget framework in context, even with the increase in the cap on non-defense discretionary spending for FY 2016, spending on these programs would remain well below the funding levels in 2010 before the caps were imposed. So while this budget deal is a helpful first step, it represents only a partial restoration of resources that were lost to several years of federal budget retrenchment and stalemate; it does not represent significant new investment.
What happens next?
Before the Continuing Resolution under which the government is currently funding its work expires on December 11, 2015, Congress needs to negotiate funding amounts for thousands of individual programs by allocating the additional room under the new, higher caps for FY 2016. Because the overall funding levels in this budget blueprint are still below the amounts that these programs received just a few years ago, even without any adjustment for inflation or population growth, Congress will face tough decisions in writing a detailed spending bill for the balance of this fiscal year. We urge Congress to use the additional funds to invest substantially in anti-poverty priorities in the subsequent “omnibus” appropriations bill and to keep it free of unrelated policy riders that could lead to another shutdown standoff later this year.
Beyond the resolution of the immediate crisis, more challenges remain. Under the new budget law, the revised spending caps for FY 2017 are at about the same nominal level as FY 2016, which means another year without accommodation for inflation or population growth.
More fundamentally, this budget agreement is only a down payment on the much larger investment that is needed to fix the remaining gaps in the safety net, address the damaging effects of low-wage work, help low-skilled youth and adults move up to better jobs, and support a two-generational approach so both parents and children can escape poverty. After years of neglect, many key programs struggle to meet the needs of today’s families. For example, the Child Care and Development Block Grant is reaching the smallest number of children in 15 years. As a result, the nation is missing out on major opportunities, such as last year’s Congressional reauthorizations of both workforce development programs and child care assistance, both of which passed by large bipartisan majorities. Yet without significant additional investment, the important improvements made by these laws will be largely empty promises.
In addition, some key priorities must be addressed through other means, such as the extension of improvements to the Child Tax Credit and Earned Income Tax Credit that are scheduled to expire in 2017. In the long run, we need a more balanced approach to deficit reduction that requires corporations and wealthy individuals to pay their fair share toward investments in our country’s needs.