On July 1, student loan rates doubled because Congress failed to agree on legislation to avert the scheduled increase.  After a month of proposals and counter-proposals, Congress enacted a solution that would result in undergraduates paying 3.86 percent interest, close to the 3.4 percent students were paying before July 1, and much less than the 6.8 percent loan rates had risen to after the lower rate expired.

In May, the House approved the Smarter Solutions for Students Act (H.R. 1911) which pegged interest rates on student loans to the market and allowed those rates to change over the lifetime of the loan. Because this legislation would have let interest rates rise too much, President Obama announced that he would veto the legislation if it reached his office. On Wednesday July 24, the Senate amended H.R. 1911, tying interest rates to market rates, but with fixed rates for the lifetime of the loan. The Obama Administration supported the Senate’s version. On Wednesday July 31, the Senate’s amended version passed easily in the House by a vote of 392 to 31. With that vote on final passage, the bill was sent to President Obama on August 1.  The President, who has already expressed his support, is expected to sign the bill.

This year, with the new legislation in place, undergraduates would pay an interest rate of 3.86 percent, graduate students would pay a rate of 5.41 percent, and PLUS loan users – graduate students and parents of students  – would pay a rate of 6.41 percent. All of these rates are lower than the existing fixed rates of 6.8 percent for Stafford loans and 7.9 percent for PLUS loans.  The enacted bill will adjust the rate in future years based on changes in the 10 year Treasury note, but limits undergraduate loan rates to 8.25 percent, graduate loan rates to 9.5 percent, and PLUS loan rates to 10.5 percent.

A group of senators opposed the bill because of its market-based approach to student loans, which will lead to higher rates than students were paying before July.  Senators Warren (D-MA) and Reed (D-RI) sponsored an unsuccessful amendment to keep the flat rate of 3.4 percent for another year, leaving time for further negotiations on how to keep rates low.  After this amendment failed, 16 Democrats and one independent voted against final passage. Originally, Sen. Tom Harkin (D-Iowa), chair of the Health, Education, Labor and Pensions Committee, was in favor of this freeze, but eventually came to support the bipartisan compromise.

The Democratic opposition argues that the bill does not offer a permanent solution to fix the student loan crisis. The plan fails to address the existing $1 trillion student loan debt, the ever increasing tuition fees, and government’s profits from these loans. (The Congressional Budget Office estimated that the Senate bill would generate $715 million in federal revenue over 10 years, less than the original House version.)  Further, while the compromise may lower interest rates on student loans below 6.8 percent in the next two to three years, in the long run the new system may increase rates.

The bipartisan group of Senators that passed the compromise pleaded for the support of the Democratic opposition, claiming that any action is better than inaction and the discussion on student loans would continue, especially because the Higher Education Act is scheduled for reauthorization next year.

The post Student Loan Bill Enacted appeared first on Coalition on Human Needs.

The House was unable to pass a farm bill with a nutrition title because the $20 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP/food stamps) approved by the House Agriculture Committee was not deep enough for some of the most right-wing members.  That proposal would have eliminated SNAP for 2 million very low-income people.  Instead, the House passed a very partisan farm bill with the nutrition provisions left out.  (For details, see the July 22 Human Needs Report.)  Now, the House leadership is reported to have crafted a new stand-alone bill including massive SNAP cuts – doubling the cuts to $40 billion, with 4 million more people losing SNAP and millions more seeing their benefits reduced.  The new bill may make it to the House floor in September.

The bill would retain all the harsh SNAP cuts in the original bill plus those that passed on the House floor before the nutrition title was axed from the farm bill.  One successful amendment would provide an incentive for states to drop unemployed people from SNAP even if they are actively looking for work but cannot find a job.  After cutting off the jobless person, the state would receive federal dollars.  The new bill according to reports would make millions more unemployed people without children eligible for SNAP for only three months out of every three years.  For the rest of the time, they cannot receive benefits unless they are working at least half-time.  Under current law, those harsh limits can be waived if the locality has a high unemployment rate.  The new legislation would end this waiver provision, now utilized in at least 45 states.  No matter how high the local unemployment rate is, 18-50 year olds not raising children would be denied SNAP benefits for 33 out of 36 months.  According to the Center on Budget and Policy Priorities, 4 million people could be affected, among them at least 1.6 million women.  The average income of these childless people is 22 percent of the federal poverty line (that is, only a little over $2,500 a year in income).

The farm subsidy provisions that passed the House increased benefits for certain farmers, including a $9 billion increase in crop insurance subsidies over 10 years.  Farm subsidies overwhelmingly are received by large corporate farms.  Three-quarters of the $23 billion in farm subsidies went to the largest 15-20 percent of farms.  One beneficiary of farm subsidies is Representative Stephen Fincher (R-TN), who attracted attention by defending the original SNAP cuts in the farm bill in a Memphis speech, saying:  “The role of citizens, of Christians, of humanity is to take care of each other, but not for Washington to steal from those in the country and give to others in the country.”  In 2012 alone, Rep. Fincher received $70,000 in farm subsidies; between 1999 and 2012, he accumulated $3.48 million in subsidies, according to the Environmental Working Group.  It is not known whether Rep. Fincher would support the doubling of SNAP cuts, targeted to the poorest of the poor.

(For more details about the proposed new SNAP cuts, see the Statement by Robert Greenstein, Center on Budget and Policy Priorities.)

The post Willing to Deny Food to 4 Million More Poor People: Rumors of House Plans to Double SNAP Cuts appeared first on Coalition on Human Needs.

Once upon a time, the House and Senate Appropriations Committees sent 12 separate spending bills to the floor of each body, after the full Congress agreed on the total funding they had to divide up.  Conference committees would resolve the differences, and bills would be enacted and sent to the President.  That was then.

This year, the House and Senate are $91 billion apart on their FY 2014 appropriations totals, with the House assuming that spending will not exceed the limits set by another year of sequestration cuts, and the Senate assuming sequestration will not take place.  The gap is made even larger by the fact that the House violates the Budget Control Act’s requirement that defense and “non-defense” are cut equally.  Instead, the House spares defense and cuts domestic programs more deeply.

On the House side, the domestic cuts are so deep that there may not be a majority to pass them.  That was the case when the House leadership had to pull the Transportation-Housing and Urban Development bill from the floor for lack of votes.  In the Senate, the leadership sought to bring big domestic bills to the floor, to show the funding they were willing to provide and contrast it with the deep cuts the House is making.  (See the July 22 Human Needs Report  for more detail about the Senate Transportation-HUD bill.)  However, while a large bipartisan majority in the Senate was at first willing to end debate on the Transportation-HUD spending bill, the bill was stymied later when only one Republican, Senator Susan Collins (R-ME) would join in voting to advance the bill towards final consideration on the floor.  So Congress left for its August recess with neither body able to pass the T-HUD bill.

While it was always a safe bet to assume that Congress would not be able to enact many individual appropriations bills, by the time Congress left town it seemed clear that they would be hard-pressed to pass any.  So in order to keep programs running after the October 1 beginning of FY 2014, Congress will have to agree upon a temporary spending measure, a.k.a. a Continuing Resolution, for as long as they choose, as they continue to work on spending choices for the rest of the fiscal year.

Ordinarily, that would not be too difficult.  Congress would continue spending with each program at this year’s level for a temporary period.  But this year, continuing at this year’s level would run afoul of the deficit reduction law (the Budget Control Act).  If Congress cannot agree on ways to stop the sequestration cuts by changing the law, it must appropriate about $20 billion less in FY 2014 than this year’s spending, and complying with the law means that the full $20 billion must be cut from defense (the domestic programs will have already taken their share of the hit).  That would not be very popular, but if Congress refused to make that cut or to enact changes in the Budget Control Act, the $20 billion Pentagon cut would be triggered automatically across each defense account 10 days after Congress adjourned at the end of 2013.

So Congress has to decide something before the end of 2013, at least if they want to avoid those Pentagon cuts.  And if they do not approve some form of spending bill by September 30, great swaths of federal programs will shut down – also not popular.   They don’t have much time to do it.  The House calendar for September includes only 9 days in session.  They will be out the week of September 23-27, and will return on the very last day of the fiscal year, September 30.

Forestalling the Crunch.  When Congress is at home in August, they will hear from constituents and gauge how much people object to the current sequester cuts and the additional ones looming for FY 2014.  Some, including House Appropriations Committee Chair Harold Rogers (R-KY), saw the failure to take up the Transportation-HUD bill as proof that sequestration has to go.  “With this action, the House has declined to proceed on the implementation of the very budget it adopted just three months ago. Thus, I believe that the House has made its choice: Sequestration — and its unrealistic and ill-conceived discretionary cuts — must be brought to an end,” Rogers said.  But for Rogers, the preferred approach would replace the appropriations cuts (also called cuts to “discretionary” programs) with cuts to mandatory programs such as SNAP/food stamps, Medicaid, Medicare, or Social Security.  The Transportation-HUD implosion did illuminate divisions among House Republicans.  Some of the most right-wing members are willing to make deep cuts in discretionary as well as mandatory programs, while other members are more supportive of funding programs (including the Pentagon). The Senate-passed budget resolution took a different approach, getting rid of most discretionary cuts by a combination of nearly a trillion dollars of new revenue over ten years plus some mandatory savings (generally attempting to avoid service reductions).  The President has also opposed achieving all the deficit reduction through domestic cuts, either discretionary or mandatory.

Out of this mix, it is hard to predict whether some may push so far in the direction of cuts that others simply cannot agree, leading to an impasse that forces a government shutdown.  Funding will stop for federal employees, nutrition aid, housing and home energy assistance, Head Start, education, environmental protection, public health, justice, children’s services, and many other areas.

Whether or not that occurs, some kind of temporary Continuing Resolution will probably pass.  If it keeps government going for about two months, the search for a longer-term solution will bump right into the next deadline to extend the U.S. Treasury’s authority to borrow (the “debt ceiling”).  Treasury’s capacity to borrow is likely to be exhausted by sometime in November (the exact date is uncertain).  It could be that Congress will be trying to work out spending options when the debt ceiling is reached – a kind of double crunch that those most opposed to spending may want to use to force cuts.   But with the public strongly opposed to self-inflicted crises, and with Republicans divided about how far to go with cuts, such brinksmanship may not work.

FY 2014 Appropriations box score:

The full House has passed the following appropriations bills:
Defense, Energy-Water, Homeland Security, and Military Construction-VA .
The full House Appropriations Committee has passed all appropriations bills except Interior-Environment and Labor-HHS-Education.

The full Senate has not passed any appropriations bills.
The full Senate Appropriations Committee has passed all appropriations bills except Interior-Environment.

The post The Approaching Crunch: Agreement on Spending Nowhere Near as Deadlines Loom appeared first on Coalition on Human Needs.

The Senate leadership will illustrate those differences by making the Transportation-Housing and Urban Development Appropriations bill (S. 1243) the first it takes to the floor.  Majority Leader Reid (D-NV) filed a motion to cut off debate on July 18; that cloture vote will take place on Tuesday, July 23.  The leadership expects to be able to get 60 votes so that the bill can be considered.   Six Republicans voted for the Transportation-HUD bill in committee; if they join with all the Democrats and Independents to cut off debate, there will be enough votes.

The Senate Transportation-HUD bill is $10 billion or 20 percent larger than the House version.  With both the House and Senate Appropriations Committees having acted on this bill, the differences to specific programs are clear.  For example, the Community Development Fund is funded at $3.295 billion in the Senate bill, but at only $1.697 billion in the House.  The Senate bill has nearly $1 billion more than the House for the rental voucher program.  While even the House bill has more funding than this year’s $17.9 billion (including sequester cuts), its funding level is not adequate to reverse more than about one-quarter of this year’s lost vouchers, and so would continue the elimination of 100,000 rental vouchers, according to the Center on Budget and Policy Priorities.  The Senate bill provides enough funds to undo most of the up to 140,000 vouchers lost this year.

The House cuts funding for public housing by 16 percent below this year’s spending (including sequestration cuts).  Coming on top of several rounds of cuts affecting public housing programs over the past few years, maintenance and repairs will fall farther behind, with more units lost due to disrepair and families forced to live in substandard conditions.  The Senate provides $838 million more for public housing capital and operations than the House.  While the Senate’s funding does not undo all the losses of the past, it comes closer to meeting current needs.

Almost every program receives less in funding in the House bill than the Senate’s, unsurprisingly, including Homeless Assistance Grants (the House is 7.6 percent lower than the Senate)and lead hazard abatement (the House is 58 percent lower than the Senate and 56 percent lower than current year spending).  (For more comparisons of House and Senate Appropriations Committee funding levels for housing programs, see the Center on Budget and Policy Priorities and the National Low Income Housing Coalition.)

In the transportation side of the bill, the Senate increases TIGER infrastructure grants to localities by $50 million (for a total of $550 million).  The House zeroes out this popular program, and rescinds $237 million previously appropriated but as yet unspent.

The Senate leadership wants to take up the Transportation-HUD bill in order to show the harmfulness of continuing the sequestration cuts, to try to build support for a negotiation with the House to replace the new round of cuts in FY 2014 with new revenues and other savings, mostly but not exclusively in Medicare.

The Senate leaders may also wish to bring the Labor-HHS-Education bill to the floor.  There the differences between House and Senate funding are particularly gaping.  The Senate bill is funded at $164.3 billion, about $43 billion more than the House (or 35 percent above House spending).  While neither the House Labor-HHS-Education Subcommittee nor the full Committee has taken up the bill so far, the full Senate Appropriations Committee has completed work on appropriations for these departments.  The House agreed-upon spending total for Labor-HHS-Education is 18.6 percent lower than this year’s levels, counting the sequester cuts.  The Senate bill is higher than this year’s spending, allowing for some of this year’s cuts to be reversed.

While a handful of appropriations bills may make it to the Senate or House floor, the prospects for the House and Senate resolving their differences and sending separate funding bills to the President for signing are dim.  Instead, Congress is likely to roll up most if not all of the appropriations bills into one stopgap spending measure (called a Continuing Resolution, or CR).  Agreeing even on such a temporary spending bill will be difficult.  The existing deficit reduction legislation, the Budget Control Act, requires that Department of Defense spending be reduced by $20 billion below current levels, so a temporary spending measure that simply continues this year’s funding will not be possible without changing the law.  (Domestic appropriations bills do not have to be immediately reduced; most of the required domestic reductions can be achieved by automatic cuts in Medicare and other mandatory programs.)

Reluctance to cut Pentagon programs, if nothing else, may force negotiators to the bargaining table to stop the sequestration cuts.  The President has threatened to veto legislation that continues sequestration.  Both he and the Senate leadership are calling for increased revenues to be part of a replacement package.  How close Congress will come to allowing a government shutdown when the fiscal year ends on September 30 is not knowable at this point; all that is sure now is that bridging the gaps between House and Senate will not be easy.   (See House  and Senate funding totals for each appropriations bill.)

The post CHN: Senate to Show the Cost of Continuing Sequester Cuts: Will Bring Transportation-Housing Appropriations to the Floor appeared first on Coalition on Human Needs.

Already modest, SNAP benefits are now set at less than $1.50 per meal per person and will be further reduced after a temporary increase expires on November 1, which will slash $25 in benefits per month for a family of three. Nutrition advocates hail H.R. 1947’s defeat in light of its deep cuts to the SNAP program.  The underlying bill would cut SNAP by $20.5 billion, denying benefits altogether to 2 million people and reducing benefits by $90 a month for another 850,000 households.  Amendments adopted on the floor would result in even more losing assistance.

A contentious amendment that severely weakened Democratic support for the bill, introduced by Representative Steve Southerland (R – FL), would allow state pilot programs to mandate work requirements for SNAP recipients. States participating in the program would be required to pay for the cost of training and employment up front. They would also share equally with the federal government any revenues from reducing expenditures on SNAP. Nutrition and low-income advocates fear that this would provide incentive for states to remove families from their SNAP participant rolls in order to increase revenue. The Center on Budget and Policy Priorities’ Stacy Dean was quoted in a Politico article saying “I can’t remember a time when policymakers ever considered giving states a kickback for refusing to serve unemployed mothers with young children.” The amendment, which Republicans praised as following in the footsteps of 1996 welfare reform, was approved almost entirely along party lines by a 227-198 vote – just minutes before the vote on the full farm bill.

Only one Democrat, Representative Jim Cooper (D – TN), voted in favor of the amendment. And of the sixty-two Republicans who voted against H.R. 1947, all but one had voted for it.

An amendment by Tim Huelskamp (R – KS), which sought to create extra work requirements for SNAP recipients and cut SNAP by an additional $9.5 million, was easily defeated 175-250. No Democrats voted in favor and 57 Republicans voted against it.

Another harsh amendment aimed at SNAP recipients was offered by Representative Richard Hudson (R – NC). It would make drug testing a requirement for all SNAP applicants. Currently, states are able to drug test applicants who have a prior history of drug crime, but this amendment would make such tests routine, adding another hoop for applicants to jump through. Nutrition advocates worry that this provision would impact the children of SNAP-eligible parents who might be deterred from applying for the program. Of the 48.5 million people in poverty, about half are children. Evaluations of drug-testing programs for TANF recipients showed that virtually no illegal drug use was detected, and were not found to be cost-effective. The amendment was approved by voice vote.

Long-term SNAP supporter Representative Jim McGovern (D – MA) introduced an amendment that would restore the $20.5 billion 10-year cut to SNAP.  The amendment had great support from House Democrats but did not have enough votes to pass; it failed 188 to 234, mostly along party lines. Anti-hunger advocates were pleased by the strong show of support for the amendment – and even some bipartisan support, with five Republicans voting yes.

The House leadership must now decide upon a path forward. Majority Leader Cantor (R-VA) has stressed his party’s desire to pass a bill before the August recess, but the feasibility of this wish is uncertain because appropriations bills are expected to require substantial amounts of floor time when Congress returns from the July 4^th recess.

Rep. Southerland has suggested that H.R. 1947 return to the floor without his amendment, although its removal might not be enough to pass the bill. Many in Congress consider a one-year extension of the 2008 farm bill the easiest and most viable option, although certain programs like the Wetland Reserves would lose authorization. The current farm bill has already been extended once, in January 2013.

In a recent development, some House conservatives have called to split the farm bill into two parts (farm policy and nutrition policy), ending years of precedent for passing the two issues together. Agriculture Chairman Frank Lucas (R –OK), along with many others in Congress, finds this idea unacceptable because farm provisions have always needed the votes of members more concerned about nutrition programs to pass. Instead, Lucas and his colleagues are deciding upon trying to pass a bill aimed at garnering more Republican votes or one that will win more Democrats to their side.

Congress has until September 30, when the farm bill expires, to make a decision. If nothing happens, SNAP will continue because SNAP is a permanently authorized program, but the various farm support and conservation provisions will end.

The post CHN: Farm Bill Fails on House Floor – What’s Next? appeared first on Coalition on Human Needs.

S. 954’s $4.1 billion cut to SNAP –achieved by limiting states’ ability to operate the “Heat and Eat” program and the addition of administrative burdens to states – will greatly affect certain low-income families nationwide. As estimated by the Congressional Budget Office, about 500,000 households will lose $90 in SNAP benefits each month under this proposal.

Many advocates are also deeply disappointed by the inclusion of the Vitter Amendment in the Senate farm bill. The Vitter Amendment precludes convicted sex offenders and murderers from participating in the SNAP program – no matter how long ago they committed the crime and in disregard for their penance and later contributions to society.  Further, the amendment will reduce or eliminate benefits for the whole household, including children, by requiring that individual’s income be counted  in determining the household’s eligibility or benefit levels for SNAP, while denying the ex-offender any SNAP benefits. It requires that all SNAP applicants write a statement disclosing whether any member of their household has been convicted of one of the aforementioned crimes, which may discourage some applications.  (For more, see this blog post from the Center on Budget and Policy Priorities’ President and Founder Bob Greenstein.)

It is considered almost certain that a similar amendment will be presented when the House bill comes to the floor.

On the House side, there was doubt that there were enough votes to pass the farm bill, with some right wing members wanting even deeper SNAP cuts, and a majority of Democrats opposing the harsh cuts already in the House Agriculture Committee’s bill (H.R. 1947).    However, the announcement that Speaker Boehner (R-OH) planned to vote for the measure signaled pressure by the House leadership to win enough votes for passage, and floor action in the House is now expected to begin on Wednesday, June 19, with a final vote possible the next day.The House Rules Committee will determine the amendments to be debated on the House floor.  One or more amendments are expected to make the SNAP cuts larger, such as increasing the reduction to $33 billion, as proposed in the House-passed Budget Resolution.  Speaker Boehner, although supporting the bill, has expressed opposition to its dairy provisions; amendments to alter these may also be considered.

Top House Agriculture Committee Democrat Collin Peterson (D-MN) has said that he expects 150 Republican votes for the House bill at best, while Republican Representative Robert Goodlatte (R-VA) calls this number optimistic.  It may be that more Republican votes will fall into line as the House leadership presses for passage.  Some Democratic votes are likely to be needed for passage, and they may be forthcoming, despite the harsh SNAP cuts.  Ranking Agriculture Committee Member Peterson supported H.R. 1947 in Committee and was joined by 12 other Committee Democrats in voting for the bill (8 Democrats voted no).  However, many Democrats oppose the SNAP cuts in the bill, and more might join the opposition if amendments succeed in making the cuts worse.

Nutrition advocacy groups such as the Food Research and Action Center (FRAC) strongly oppose the short- and long-term effects of the $20.5 billion cut, which would deny SNAP to around 2 million people currently eligible and take free school meals away from over 200,000 low-income children. (Read more about these cuts in a statement from FRAC.)

House Republicans are determined not to let the bill die on the floor, especially after last year’s humiliating stalemate which forced Congress to pass a temporary extension of the farm bill, delaying the House debate until this year.  Anti-hunger advocates will press their opposition to the bill, preferring its failure in the House as long as it includes large SNAP cuts.

The post CHN: Senate Passes Farm Bill with Cuts to SNAP as House Prepares to Bring Even More Devastating Bill to the Floor appeared first on Coalition on Human Needs.

Following the lead of the House-passed Budget Resolution, the Appropriations Committee divided up $967 billion in funding on May 21, making the assumption that a second year of cuts will take place.  While the deficit reduction legislation that mandated sequestration does call for this total, the House violates the law by ignoring the required subtotals for defense and non-defense spending.  The House committee approved $512.5 billion for defense, or about $15 billion more than the deficit reduction law allows in FY 2014.  The House committee also cuts $20.6 billion more than the law calls for in all the other programs subject to the sequester cuts.

The funding levels provided to each of the Appropriations subcommittees (called the “302(b) allocations”) make it possible for them to report out bills.  The first approved by the full House Appropriations Committee on May 21 was for Military Construction-Veterans’ Affairs.  This non-controversial bill is one of the few that receives more funding for FY 2014 than it got this year – a 3.4 percent increase, even assuming the lower sequestration total.

The House Appropriations Committee’s priorities are clearly with the military, veterans and homeland security – these are the only areas that get increases over current spending.  In marked contrast, the appropriations bill for the Departments of Labor, Health and Human Services and Education will be cut 18.6 percent below this year’s levels.  The Transportation-Housing and Urban Development spending bill will be cut 9 percent.  Interior-Environment spending will be cut 14 percent, and Energy-Water will be reduced by 11.2 percent.  Financial Services, which includes funding to implement the Dodd-Frank legislation for regulation and consumer protection related to the finance industry, is cut 14.6 percent.  (See the House allocations for each Appropriations subcommittee. See this table for more information on 302(b) subcommittee allocations, compiled by Democratic Staff of the House Committee on Appropriations.)

This year’s sequestration amounts to an approximately 5 percent cuts to domestic programs that are not exempt.  These reductions have resulted in early closings and cancelled summer programs in Head Start, followed by announcements around the country that classes will be shut down and enrollments reduced in the fall.  If a cut well over three times this size were inflicted in FY 2014, many more children would be denied Head Start.  Similarly, if cuts to meals for seniors were more than tripled, programs that are now reducing the number of days they deliver meals or closing dining rooms would have to make drastic additional reductions.  Rental housing voucher cutbacks so far have meant no new vouchers are available in many jurisdictions.  If these cuts were multiplied, housing authorities would be unable to avoid taking away vouchers that now keep people from becoming homeless.    (For more information about this year’s sequestration cuts, click here.)

Appropriations bills do not become law until final versions are negotiated between the House and Senate.  That will be harder than ever for FY 2014.  The House and Senate have not agreed on a total figure for appropriations – a key decision point in budget resolutions.  In contrast to the House budget’s $967 billion total, the Senate’s budget calls for $1.058 trillion, based on the assumption that the additional sequestration cuts will not occur.  (The Senate budget makes up well over $1 trillion in deficit reduction through FY 2021 by a combination of revenue increases and savings in areas mainly including Medicare, farm supports, the Pentagon, and some additional domestic appropriations cuts). The Senate budget resolution specifies that defense spending will total $552 billion in FY 2014, and domestic/international funding will add up to $506 billion.

The Senate Appropriations Committee has not yet divided up these totals into its own 302(b) allocations, but expects to do so during the week of June 17, when it also expects to take up the Military Construction-Veterans Affairs appropriations bill.  But its higher total means that there will be substantial differences between the House and Senate on most appropriations bills.  In the absence of an agreement between the two bodies, the deficit reduction law now in place will require the lower total of the House, but will also require the House to cut about $15 billion from its recommended funding for defense.

Neither House nor Senate appropriators are enthusiastic about this looming result.  Chairman Hal Rogers of the House Appropriations Committee called for “…a budget compromise that will undo the damaging sequestration law and give us a single, common top-line allocation with the Senate” when his committee passed its appropriations allocations on May 21.  Chairwoman Barbara Mikulski of the Senate Appropriations Committee is insisting on passing appropriations bills that are not subject to continuing sequestration cuts.  But, while appropriators are trying to pass separate spending bills according to “regular order,” it is easy to imagine that as the beginning of the new fiscal year approaches (October 1), threats of government shutdown will intensify in the face of seeming inability to bridge the wide differences.

Rearranging the Deck Chairs.  As reports of harmful sequestration cuts accumulate, some Senators are looking for a way out.  Some are seeking increased flexibility for federal agencies to determine how to make the required cuts, to get out from under the across-the-board equal percentage cuts the law calls for.  Senator Richard Shelby (R-AL), the ranking (senior) Republican on the Senate Appropriations Committee, has a proposal to allow agencies to move a limited amount of funding around among accounts.  Senators Susan Collins (R-ME) and Pat Toomey (R-PA) have similar proposals, with agency decisions to alter the automatic cuts subject to review by Congress.  Other bills, such as a plan being developed by Senators Inhofe (R-OK), Toomey and Manchin (D-WV), would require the President to submit an alternative set of cuts, which could be rejected by Congress.  All these plans would substitute different cuts in appropriations for the ones now in place.  Advocates for human needs programs are quite concerned that this might spare some programs, but could easily lead to even more damaging cuts to programs that are less popular or known, but that provide important services to vulnerable people.  Without revenues from fair sources and long-term savings from the Pentagon, key players such as Senate Budget Committee Chair Patty Murray (D-WA) believe that human needs program cuts cannot be successfully replaced.

The post CHN: House Appropriations Committee Sets Funding Levels for FY 2014: Domestic Programs Slashed While Pentagon is Protected appeared first on Coalition on Human Needs.

The federal government borrows money by issuing bonds.  About one-third of that debt is held within the government, by the Social Security Trust Fund.  Of the rest of the debt, nearly one-half is held by foreign governments; the remainder by corporate, pension fund, and other private financial interests.  The U.S. Treasury borrows enough to fill the gap between revenues collected and obligations to spend (that is, the deficit).  Despite the fact that Congress approves federal spending, it separately sets in statute limits on how much the federal government can borrow.

If the federal government hits up against the statutory ceiling on debt and Congress refuses to raise it, the federal government would not be able to spend more than the revenues it takes in each month.  H.R. 807 sets priorities for which bills to pay, placing bondholders at the front of the line.  Those who have bought U.S. bonds would be paid their principal and interest, and the Treasury would be authorized to exceed the limit on borrowing if necessary to prevent any default on bonds.  The bill was amended to add federal bonds held by the Social Security Trust Fund to its “must-pay” list.  By prioritizing repayment of funds borrowed by the federal government from the Social Security Trust Fund, it would make it make it possible to keep paying Social Security benefits without interruption.

H.R. 807 would not prevent the federal government from reneging on its other funding commitments, however, if the debt ceiling were not raised by Congress.  This legislation would in effect re-set the priorities established by Congress when it passes any legislation related to funding.  Bondholders and Social Security come first; everything else government does, from Medicaid to transportation to nutrition aid, is funded in part or not at all.

The Obama Administration issued a statement promising to veto this legislation if it made it to the President’s desk.  The Democratic leadership in the Senate has also voiced opposition.  However, Senator Pat Toomey (R-PA) previously introduced the Ensuring the Full Faith and Credit of the United States and Protecting America’s Soldiers and Seniors Act (S. 46) which he will seek to move as a stand-alone bill or attached to other legislation.  It has three items on its “must-pay” list – bondholders, Social Security bonds and beneficiaries, and military salaries.  As with H.R. 807, the Treasury would be allowed to borrow, even if it exceeds the existing debt ceiling, in order to pay these obligations.  The Senate Democratic caucus is not expected to support this legislation either.

There is reason to doubt that continuing to pay bondholders and a few powerful constituencies will end the risk to U.S. fiscal stability if Congress refuses to allow borrowing to pay its other bills.  When Standard and Poor’s downgraded the federal credit rating in 2011, it did so because it felt the stalemate that left us uncomfortably close to default made the federal government “less stable, less effective and less predictable” in its financial management.  New cliff-hanging negotiations threatening massive non-payment of bills and salaries will not be seen as a boon to stability and predictability.

The post CHN: Choosing Which Federal Debts to Honor; House Passes Bill to Protect Only Bondholders, Social Security If Federal Borrowing Authority Expires appeared first on Coalition on Human Needs.

The furloughs of air traffic controllers were the result of sequestration, the across-the-board automatic cuts triggered when Congress was unable to agree on a more sensible plan for deficit reduction.  The sequester was meant to be a thoroughly unappealing means of cutting about $1.2 trillion through FY 2021, with cuts equally assigned to the Pentagon and to domestic programs.  Initially set to kick in on January 1, 2013, Congress replaced the first two months of these cuts in hopes of a last ditch effort to come up with an alternative.  Enough Republicans decided they could tolerate the military cuts, so no deal, and sequestration took effect at the beginning of March.  (For background on sequestration, see Senseless Cuts Begin in the March 4, 2013 Human Needs Report.)

The President and Congressional Democrats continued to call for a comprehensive replacement of the sequestration cuts. Senate Majority Leader Reid (D-NV) offered legislation in the week before recess to stop the FY 2013 cuts, paying for them with savings from ending the Iraq and Afghanistan wars.  But a bipartisan group of Senators abandoned the call for a comprehensive solution to carve out the airport fix.  The bill passed in the Senate was sponsored by Senator Susan Collins (R-ME), with 15 co-sponsors including six Democrats (Begich-AK, McCaskill-MO, Nelson-FL, Rockefeller-WV, Udall-CO, and Warner-VA).  Similar legislation had been previously co-sponsored Senators Klobuchar (D-MN) and Hoeven (R-ND).  The Administration caved too:  spokesman Jay Carney told reporters that the President would “be open to looking at” separate legislation to allow the FAA to move money around to end the furloughs.

In passing legislation that let the FAA spend less on infrastructure improvements and shift those funds to pay the air traffic controllers, Congress was coming closer to the approach of a number of Republican-sponsored bills.  S. 799, co-sponsored by Senators Inhofe (R-OK) and Toomey (R-PA) would give the Obama Administration until May 15 to come up with alternative cuts for all of sequestration, but would not reduce the total amount to be cut.  The White House and Senate Democrats have strongly opposed this approach, saying that it is impossible to cut $85 billion in this fiscal year without doing harm, and sparing some programs will only result in even more unacceptably deep cuts in others.  The FAA could choose to put off building projects, even though that hurts jobs now and will constrain economic growth in the future.  Most other programs do not have funds to invest in infrastructure, so this choice is not even an option.

In a minor footnote to Congress’ haste to adopt this legislation, a typo made it necessary for the bill to be taken up one more time for form’s sake in the Senate.  This occurred on April 30, and the bill is now on its way to the President’s desk.

While the President will sign this legislation, he has continued to point out the harm of allowing cuts to proceed for vulnerable children seeking Head Start and other programs that affect the health and life chances of hundreds of thousands of people.  But every time a powerful interest is able to carve out its own fix, the chance of getting agreement on ending sequestration is diminished.

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The Politics.  The President’s budget includes $166 billion in job creation initiatives, investing in infrastructure improvements, clean energy, and a comprehensive re-building approach in 20 poor communities.  It commits modest funding towards all levels of education in addition to the early childhood initiative.  But by using the budget as a platform to put forward a deficit reduction offer already made to Speaker Boehner (R-OH) and rejected by him, it makes cuts in Social Security strongly opposed by most Democrats and raises less revenue than the Senate budget plan.  As a gambit to demonstrate his willingness to compromise and to smoke out Republican unwillingness, the budget seems to have worked.  Pundits praised the elements of compromise and Republicans scrambled away from previous support for the Social Security change in order to stay firmly opposed to the President.  (Last December, Bloomberg News reported that Speaker Boehner was “pressing harder for the CPI revision than for other entitlement changes…”  Senate Minority Leader McConnell (R-KY) was looking for higher Medicare premiums for upper-income retirees, raising the age to become eligible for Medicare, and reducing Social Security benefits by shrinking the adjustment for inflation (the “chained CPI”) in order to consider new revenue last winter.)  But although the President included the reduced inflation adjustment and higher Medicare payments for upper-income retirees, his budget was rejected out of hand by the Republican leaders.

The President has said that he will only agree to cut Social Security as part of an overall deal that increases revenues and includes some economic investments.  But many strong advocates for Social Security and other vital safety net programs strongly oppose the Social Security cut under any circumstances.  Even those who could imagine it as part of a plan with healthy doses of revenue and job creation are worried now that the Social Security cut will find its way into a far less helpful budget plan.

The Math.  The President proposes $3.78 trillion in spending and $3.03 trillion in receipts for FY 2014, leaving a deficit of $744 billion, down from a deficit of $973 billion this year.  The deficit will decline from 6 percent of GDP now, to 4 percent in FY 2014, and down to 1.7 percent of GDP in 2023.

Revenues.  The budget includes $583 billion in revenue increases over 10 years from limiting high-income deductions to 28 percent and from increasing taxes on millionaires.  It adds another $100 billion in revenues from the chained CPI proposal’s effects on tax payments, and adds $78 billion in tobacco taxes to pay for the early childhood initiative.  In a move disappointing to many human needs advocates, the President’s budget lists a large number of corporate tax loophole-closings, but holds them in reserve to pay for an unspecified reduction in corporate tax rates.  Advocates are seeking a net increase in revenues from any corporate tax reform agreement, but the President would make reform revenue-neutral.

Spending Overview:  The President’s budget would replace the multi-year cuts that started this year with sequestration with the new revenue, plus about $400 billion in health care savings (largely Medicare), $130 billion from spending cuts due to the chained CPI reduced inflation adjustment, another $200 billion in savings in other mandatory programs (such as farm subsidies), and $200 billion in appropriations cuts, split evenly between the Pentagon and other programs.  By reducing the deficit, interest payments will decline by $210 billion over the same 10-year period.  Together, the revenues and spending cuts will reduce the deficit by $1.8 trillion.  The Administration estimates prior deficit reduction at $2.5 trillion; adding in his new budget proposal, deficit reduction would total $4.3 trillion over 10 years.

Budget Comparisons:  The President’s budget raises less revenue than the Senate’s $975 billion from progressive sources over 10 years.  The President’s plan cuts mandatory spending more ($600 billion in health care and other savings); the Senate’s mandatory savings total $350 billion.  The President cuts discretionary spending (appropriations) less than the Senate.  The Senate cuts $240 billion from the Pentagon, compared with $100 billion in the President’s budget.  The Senate cuts domestic and international appropriations by $142 billion, compared with the President’s $100 billion.

The Administration’s and Senate’s plans both differ starkly from the House budget, which includes no net revenue increases, and cuts spending by about $5 trillion, plus another $700 billion in interest savings.  The Pentagon is not cut.  About two-thirds of the cuts affect low-income programs, including deep cuts in Medicaid and SNAP/food stamps.  (For more details about the House and Senate budgets see the March 18 Human Needs Report.)

Details on Low-Income Programs in the President’s Budget:

Early Childhood:   The $75 billion 10-year Preschool for All proposal to ensure that every low- and moderate-income four year old gets pre-kindergarten education is joined by $1.4 billion next year for Early Head Start and child care partnerships to increase high quality early learning programs for infants and toddlers through age three.  Further supporting young families, the budget would expand voluntary home visiting services for families with newborns, with $15 billion over ten years, starting in FY 2015.

Aid to Poor Communities:  The President’s budget attempts a comprehensive approach, putting together resources from multiple government agencies to attack both the causes and toxic by-products of poverty.  It would create 20 Promise Zones, coordinating housing, education, anti-violence, and other economic development initiatives.  The Choice Neighborhoods Initiative would provide $400 million to improve distressed HUD-assisted housing in very poor communities (up from $120 million this year).  Homelessness Assistance Grants are increased by about $350 million, not counting the extra across-the-board cuts now being made.  Apart from the early childhood education expansions, there are initiatives to improve high schools and to invest in community colleges, both targeted to low-income community needs.  Related to the Administration’s push to reduce gun violence, the budget includes $160 million in new funds for Project AWARE, providing for more trained mental health providers able to work with children and youth in school, as well as more public safety support in poor communities.

The budget repeats the President’s $12.5 billion Pathways Back to Work proposal, which would fund summer and year-round jobs and training for low-income youth and provide subsidized jobs and training for the long-term unemployed.  This initiative was part of the President’s unsuccessful American Jobs Act proposal last year.  In part, it builds on the success of subsidized jobs funded through a now-expired Temporary Assistance for Needy Families emergency fund, in which hundreds of thousands of temporary jobs were created.

There are broader job creation initiatives, with funding to rebuild infrastructure, invest in clean energy, and create manufacturing hubs.  These are not specially targeted to help the poor, but overall efforts to create jobs will be a help, especially if the Administration connects job training for low-income workers to these new plans.

Reverses SNAP Cuts:  Millions of poor people are now facing a reduction in SNAP/food stamp benefits scheduled to start in November.  The President’s budget would cancel that loss in food assistance, estimated to cost a family of three $20-$25 a month.  In another critical area where the budget at least partially reverses cuts to low-income programs, rental housing vouchers for low-income families are increased by more than $1 billion.  The automatic cuts now in effect could reduce the number of vouchers going to low-income families by 140,000, out of 2.2 million households now benefiting from this form of housing assistance.  The President’s budget would end these cuts.

Makes Low-Income Tax Credits Permanent:  While the last deficit reduction deal made the Bush tax cuts permanent for all but the richest 1 percent, the low-income tax credits were only extended for five years.  The Obama budget makes the current levels permanent for the Child Tax Credit, Earned Income Tax Credit, and the American Opportunity Tax Credit (the latter for college students).  The Child Tax Credit and EITC lifted more than 9 million people out of poverty in 2011.  However, the chained CPI proposal will reduce the value of the Earned Income Tax Credit over time.

Protects Health Coverage:   The budget protects Medicaid and the Children’s Health Insurance Program.  It continues implementation of the Affordable Care Act, showing states that they can count on the promised federal support for expanding their Medicaid programs.

Cuts to Low-Income Programs:  Unaccountably, despite the Administration’s emphasis on interconnected programs to maximize effectiveness, the budget repeats its proposal to slash the Community Services Block Grant to $350 million (down from $682 million this year, not counting the across-the-board cuts).  These funds support community action agencies nationwide, which administer Head Start, home energy assistance, emergency food, and local economic development and other anti-poverty initiatives.  These agencies leverage private dollars and do the kind of coordination of services the Administration is counting on.  The budget also cuts the Low Income Home Energy Assistance Program (LIHEAP) by more than $500 million, counting this year’s across-the-board cuts.

Scope:  By choosing to stick to the deficit reduction offer made and rejected last year, the budget cannot support enough job creation and economic development to meet the needs of the current weak economy.  There is no doubt that there is strong opposition to making the needed investments.  But just as President Obama’s leadership has maximized public support for gun legislation and helped to shape public support for immigration reform, his leadership in pressing for jobs and shared prosperity will matter.

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