Waiting for the Other Shoe to Drop

Analysts, pundits and press are reporting on daily progress — if we can call it that — toward a federal budget for the upcoming fiscal year.

Meanwhile, the entire panoply of programs that depend on annual appropriations are at high risk of automatic across-the-board cuts come January 2013. So are some so-called mandatory programs, i.e., those whose funding is assured by the laws that created or renewed them.

The cuts would be the first round in an annual series — divided between defense and non-defense, i.e., everything else the federal government spends money, except certain specific programs and interest on the debt.

The Center on Budget and Policy Priorities estimates the initial hit to the non-defense discretionary programs at $38.7 billion — these on top of the cuts Congress has already made.

By the end of the series, in 2021, cuts to these programs would total an estimated $294 billion. Congress would presumably try to hit the reduction targets. Across-the-board cuts would slice off any excess.

As you may know, Congress agreed to the automatic cuts as part of the Budget Control Act — the compromise that resolved the stalemate on the debt ceiling last August. But it didn’t intend for them to happen.

Sequestration — the technical name for across-the-board cuts — is a blunt instrument. Nobody likes it.

In fact, it was put into the BCA to give the Super Committee a super incentive to come up with a more sensible plan for reducing the deficit.

As I’m sure you do know, the incentive didn’t work. So now Congress has to decide whether to let sequestration go forward or pass an alternative the President will sign.

The President himself as an alternative in his proposed budget — hit the deficit reduction targets by a mix of spending cuts and revenue raisers.

In the latter category we’ve got tax increases on upper-income filers and some corporate tax loophole closers, but also initiatives that would increase taxable income by getting more people back to work.

The Ryan-Republican budget plan includes a very different alternative — “reprioritize sequester savings,” as Ryan’s spokesman puts it.

Translated out of double-speak, this means give defense more than the Pentagon wants and cut both discretionary and mandatory non-defense programs well below the levels the BCA would require — a whopping $261 billion more over the first 10 years.

Cuts to mandatory programs would include some that are now shielded from the across-the-board cuts — Medicaid, for example, and SNAP (the food stamp program).

Well, neither of these plans will get enacted. And large majorities in the House swiftly dispatched five others.

So unless something quite remarkable happens — or Republicans sweep the November elections — the across-the-board cuts the BCA mandates is what we’ll have.

What would they mean for programs that serve the needs of low-income and other vulnerable people? A new report by the Coalition on Human Needs offers a tentative answer.

I’ll return to it in another post, but you can guess the drift from the title CHN chose — Self-Inflicted Wounds.

They’re wounds not only to low-income people, but to many of those still hanging on by their fingernails in the middle class. And they’re wounds to our economy now and for the long term.

Take a look at the projected nationwide cuts and you’ll see what I mean.

9 Responses to Waiting for the Other Shoe to Drop

  1. […] decided to write about the across-the-board spending cuts the Budget Control Act mandates because I wanted to be […]

  2. […] and others resurface when House and Senate negotiators sit down to work out a way to avert the across-the-board cuts due to begin next […]

  3. […] House budget reconciliation bill, i.e., the Republican majority’s alternative to sequestration, would blow away “heat and eat” altogether, saving close to $14 billion over the same […]

  4. […] that everyone is talking about, i.e., the expiration of the Bush tax cuts and the onset of the across-the-board spending cuts triggered by the Super Committee’s failure to agree on a more sensible way to reduce the […]

  5. […] funding for the upcoming fiscal year is iffy — not only because of the pending across-the-board cuts, but because Congressional leaders have decided to put off final decisions on a […]

  6. […] bargaining table is how to hit the deficit reduction targets imposed by the Budget Control Act by some means other than the across-the-board cuts scheduled to start in […]

  7. […] CFO rightly expresses concerns about the potential impact of the impending across-the-board cuts in federal spending and other potential threats to the local economy. So it would seem prudent to […]

  8. […] They’d share a loss of about $180 million if the “fiscal cliff” negotiations don’t halt the impending across-the-board cuts. […]

  9. […] I’ve said before, no one likes the across-the-board cuts — a genuine bipartisan sentiment here. But we […]

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