Budget Deal Would Halt Some Sequester Woes, Provide Fiscal Stability

As pundits dissect the proposed budget deal hammered out by the committee co-chaired by Representative Paul Ryan (R-WI) and Senator Patty Murray (D-WA), CLASP is examining the proposal with a focus on how it affects low-income children, families, and individuals.  Following are questions about the deal with responses from CLASP experts Olivia Golden, Helly Lee, Elizabeth Lower-Basch, Hannah Matthews, and Neil Ridley.

Q. What are the implications of this budget deal for low-income children, families, and individuals?

A.  On balance, the Bipartisan Budget Act of 2013 accomplishes several important things for low-income people but also has a very large gap.  One big plus is that it restores most, though not all, of the reductions imposed by the “sequester” over the next two years on discretionary programs such as child care subsidies, Head Start, job training, education, and child nutrition.  The deal will allow for total domestic discretionary spending above FY 2013 levels, although still below FY 2012. A second plus is that with spending levels set for two years, we can return to a more typical budget and appropriations process, reducing the likelihood of further government shutdowns and enabling programs and state and local governments to plan ahead.  And a third is that unlike some proposed plans, the deal leaves intact the key mandatory programs – such as Medicaid and Social Security – that are so important to low-income families.

The biggest minus of this budget deal for low-income people is that it doesn’t include an extension of unemployment benefits for the long-term unemployed. 

So we believe that on balance, Congress should approve this deal – and should also act promptly to extend federal unemployment insurance for the long-term unemployed.

Q. Do we now know what funding levels individual programs will have in FY 2014?

A.  No.  But this agreement is enough to restore most, but not all, of the cuts imposed by the sequester.  It also brings a level of stability to the government’s fiscal situation for both FY 2014 and FY 2015, preventing a continuation of the crises that have surrounded the budget negotiations over the last few years.   For 2014, the proposal would set the overall discretionary spending level for the current fiscal year at $1.012 trillion, which is midway between the Senate’s proposal of $1.058 trillion and the House’s of $967 billion. The agreement paves the way for an omnibus appropriations bill in the next few weeks, before the continuing resolution expires on January 15, 2014.  For FY 2015, it sets spending levels at $1.014 trillion and makes it more likely that Congress will complete its appropriations work before the start of the fiscal year.

Q.  What is included in the deal related to the President’s early learning initiative and the proposed Strong Start for America’s Children Act?  What about funding levels for current child care and early education programs such as child care subsidies and Head Start?

A.  As noted above, the proposal doesn’t specify funding for any individual programs, including child care and early education programs.  Most importantly, the deal prevents more sequester-related cuts for Head Start and child care in the next two years. Related to the Strong Start proposal, the deal includes specific provisions – called “reserve funds – that send a message that child care, pre-kindergarten and home visiting are important priorities. Reserve funds do not, however, provide actual funding, which means Congress needs to find a way to pay for any new legislation. The President has proposed using a tobacco tax to provide mandatory funding for his proposal.  The crucial next step towards supporting child care and early education programs is the overall spending level for the Labor, Health and Human Services and Education Appropriations Subcommittee, likely to be set very soon.

Q.  Does the proposed deal address the soon-to-expire extension of federal unemployment insurance for the long-term unemployed?

A.  No.  The deal does not address the extension of Emergency Unemployment Compensation.  Therefore, 1.3 million long-term unemployed workers – and their families – will see this assistance stop by December 28, 2013 if Congress does not act soon.  This would both be devastating to these workers and their families, and act as a drag on the economy as a whole. We urge Congress not to leave for the holidays without acting to continue benefits for unemployed workers.

Q.  Prior to this agreement, the government had to deal with a series of repeated budget crises.  What was the effect of that instability on the operation of government and on programs that support people as they seek economic security?

A.  The real costs of start-and-stop government – like what we saw during the shutdown in October – are the damages to high-quality, reliable, and effective public services.  When you tally the costs this way, they add up to far more than the short-term economic losses for families and communities.   When we ask for high performance from our government, but then burden our programs with brinksmanship, shutdowns, start-and-stop budgets, and arbitrary cuts, it’s like asking athletes to race with their shoelaces tied together.  We ask government to do hard things – to find cures for diseases, to help children overcome the disadvantages of poverty, to rebuild distressed communities.  We need to give programs the funding – and the stability – they need to succeed. 

Q.  What about the Farm Bill and SNAP?

A.  The Farm Bill is still being negotiated among conference committee leadership and will not be voted on until January. This delay will not affect SNAP benefits (formerly known as food stamps), but there had been some concerns about an increase in dairy prices if a Farm Bill is not passed by January 1, 2014.  The Administration has indicated that it will be able to delay issuing the regulations that would cause dairy prices to rise in the absence of a bill, thus allowing more time for Congress to come to agreement in early January.  We are very concerned about reports suggesting that a deal may include further cuts of $8.6 billion to SNAP. These cuts are on top of those that already took place November 1-totaling about $11 billion over fiscal years 2014-2016 – when increases in benefits through the Recovery Act expired.  We urge Congress to support a Farm Bill that protects SNAP.

Q.  Is this the “grand bargain” that we’ve heard so much about?

A.  No.  Ryan and Murray were able to come to agreement by setting aside the issues on which the two parties are furthest apart.  This agreement does not include any tax-related provisions, and it does not include any changes to Social Security.  (It does make small changes to Medicaid and Medicare, including extending the mandatory portion of the sequester for two years.)  It addresses the sequester for FY 2014 and FY 2015, but leaves it in place for years after that.  It also does not raise the debt ceiling, which the Treasury estimates will need to be raised again sometime between March and June 2014.

Q:  What happens next?

A.  The House has passed the bill with bipartisan support by a vote of 332-94.  Next stop is the Senate, which is expected to pass the bill during the week of December 16.  Then, when Congress returns in the New Year, it will have only a very short time to decide on spending levels for individual programs and pass appropriations bills before the current “continuing resolution” expires on January 15, 2014.  This will also be a key time for Congress to take action on unfinished business, including Unemployment Insurance and the Farm Bill, if it does not address these critical issues this year before adjourning.