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 compromise ties student loan interest rates to changes in Treasury note rates.  This approach is favored by President Obama and a bipartisan group in Congress.  Others, notably Senators Harkin (D-IA), Reed (D-RI) and Warren (D-MA), support maintaining a flat rate.  They backed a two-year extension of the recently expired 3.4 percent rate, to allow time to build support for an alternative to letting student loan interest rates fluctuate with market forces.  An extension of the current rate was unacceptable to Republicans, who blocked its consideration in the Senate.

Senator Harkin worked with the bipartisan group seeking a resolution, insisting that front-end caps be included, to limit the amount that rates can rise. The compromise legislation (S. 1334), would cap undergraduate loans at 8.5 percent, graduate loans at 9.5 percent, and PLUS loans (for parents of undergrads and for graduate/professional degree loans) at 10.5 percent.  Despite his preference for lower rates, Senator Harkin is expected to vote for this bill.

The bipartisan group of Senators includes Joe Manchin III (D-WV.), Jack Reed (D-RI), Tom Harkin (D-IA), Tom Carper (D-DE), Angus King (I-ME), Lamar Alexander (R-TN), and Richard M. Burr (R-NC).  An earlier plan devised by the group would have cost the Treasury $22 billion over the next ten years, according to an estimate by the Congressional Budget Office (CBO), a number too high to earn Republican support. The House’s version of the bill (H.R. 1911, passed last May) will ultimately raise money for the government, and Republicans have emphasized that they do not want a bill that increases the deficit.  The new compromise, S. 1334, is said to save $715 million over 10 years.  That is not far from the bipartisan group’s goal of making the legislation deficit neutral.

Senator Harkin and the other senators who oppose rates as high as would be allowed under this bill do not see this as necessarily the final student loans outcome, since the Senate will take up the reauthorization of the Higher Education Act in the fall.  But there is considerable pressure on Congress to prevent 6.8 percent loan rates from affecting students as the new academic year starts.

The Senate proposal would tie the student loan interest rates to the auction rate for 10-year Treasury notes, which this year is 1.81 percent.  Added to that would be specific percentage points for undergraduates, graduate students and PLUS loans.  This year, the undergraduate loan interest would be 3.86 percent; graduate loans would be 5.41 percent, and PLUS loans would be 6.41 percent.  The caps on maximum interest would offer protection if Treasury note rates start to rise.

If the Senate passes the bill, conferees will still have to work out the differences between the House and Senate versions.  However, the differences are not very large, and the President supports the Senate plan.

The post CHN: Student Loans Update: Deal on Compromise Bill Reached; Vote Expected This Week appeared first on Coalition on Human Needs.

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.

The post CHN: The President’s FY 2014 Budget: Important Initiatives Face Uphill Battle appeared first on Coalition on Human Needs.

The House subcommittee bill, which passed mostly along party lines, is not at this point expected to be taken up by the full Appropriations Committee or by the full House as a separate bill. Most analysts believe that Congress will not get final agreement on spending bills before funding runs out on September 30, and will instead pass a combined stopgap measure to extend funding to some point past the election.

The subcommittee provides $150 billion in funding for FY 2013, $6.8 billion below the enacted level for FY 2012 and $8.8 billion less than the Senate’s Labor-HHS-Ed bill (S. 3295) and the President’s proposal.  Both the Senate and the President provide funds at the level enacted last August in deficit reduction legislation (the Budget Control Act; seeHuman Needs Report, August 9, 2011 for a description of that law).  The House decided to go lower.  However, there have been a number of reports that House members will ultimately agree to the higher Senate totals for appropriations at least on a temporary basis to postpone final decisions till the next Congress.

The bill makes much of its savings by eliminating funds for the Affordable Care Act (the health insurance reform recently upheld by the Supreme Court), said by Committee Chair Hal Rogers (R-KY) to cut $8.6 billion in FY 2013 and $123 billion over 10 years.  The health care law is not the only source for cuts, however.  The Department of Labor would receive $497 million less than this year’s funding; Health and Human Services is funded at $1.3 billion less than the current year; the Department of Education would receive $1.1 billion less.

According to an analysis by the House committee’s Democratic minority, the bill would cut substance abuse and mental health programs $324 million below FY 2012 funding.  It would cut teen pregnancy prevention programs by $93 million, and transfer $20 million of the remaining $40 million to abstinence education, which research has shown to be ineffective at pregnancy prevention.  The bill eliminates the Obama Administration’s education reform initiative Race to the Top, which provided $549 million in grants to school systems this year.  Family planning funding under Title X is eliminated.  Title X provides health care services including cancer screenings and contraceptives for low-income women.

Among other cuts, the bill would reduce Job Corps funding from $1.7 billion in FY 2012 to $1.57 billion in FY 2013.  It cuts the Ryan White AIDS funding by $47.6 million (down from $2.39 billion this year).  The President’s budget proposed to increase Ryan White funds to $2.47 billion.  Refugee and Entrant Assistance is reduced from $768.3 million to $658.2 million (the President proposed increasing this funding to $805 million).  The Social Services Block Grant is reduced from $1.785 billion to $1.7 billion. The bill also eliminates Americorps, Vista, and most other programs under the Corporation for National and Community Service, leaving funds only for the National Senior Volunteer Program.

The House subcommittee bill does maintain or increase funding in key areas.  It increases Head Start funding by $45 million (up from $7.968 billion in FY 2012); child care appropriations rise by nearly $25 million (from $2.278b in FY 2012).  In both these early childhood programs, the President’s proposal provided somewhat higher increases.  It maintains home heating and cooling assistance for low-income households at $3.47 billion (the President had proposed cutting LIHEAP down to $2.82 billion).  The subcommittee budget also keeps the same funding for the Community Services Block Grant ($677.4 million), which the President’s FY 2013 proposal would have cut to $350 million.  Education for children with disabilities (IDEA) funding rises to $13.1 billion, from nearly $12.4 billion in FY 2012.

The policy prohibitions in the draft bill provide ideological and partisan red meat to some of the House’s most right wing members.  There are several anti-labor provisions.  One would prohibit the Department of Labor from finalizingregulations covering home care workers working for home care agencies with minimum wage and overtime protections from which they are currently excluded.  Over 19,000 comments in favor of extending these protections were received by DOL when it published draft regulations.  The bill would prevent the Administration from doing further work on rules to improve the prevention of Black Lung disease among coal miners, who are experiencing a resurgence of the disease.  The bill would ban new agriculture child labor protections.

The bill seeks to end the Administration’s efforts to require post-secondary programs to disclose their students’ graduation and job placement rates and to withhold federal student loan participation in institutions that load up students with unsustainable debt with large risk that they will not have earnings adequate to repay their loans.

The Senate Labor-HHS-Ed bill does provide funding for the new health care law, and does not contain the policy riders described above.  It funds home energy assistance and the Community Services Block Grant at current levels, also rejecting the reductions proposed by the President, and similarly increases child care and Head Start.

While the likeliest outcome in the near term will be temporary funding at the Senate level, it is not clear whether House members will fight hard to include at least some of the policy riders in the appropriations agreement.

The post CHN: Ideological Buttons Pushed in House Subcommittee’s Labor-HHS-Education Funding Bill appeared first on Coalition on Human Needs.

Student loan interest rates would have doubled from 3.4 to 6.8% on July 1 had this $5.9 billion one-year extension of the current rate not been enacted. The increased student loan rate would not have affected existing loans, only new ones.  While averting this increase certainly helps some students, some advocates have pointed out that Congress has already inflicted cuts in Pell grants for low-income students last year which remain in place (see this article in the May 14 edition of the Human Needs Report for more information). Despite loan interest rates staying the same, other loan changes taking effect on July 1 will still affect students attempting to pay for college. Students borrowing for graduate degrees will become responsible for paying the interest on their federal loans before they have graduated or immediately after they graduate. For undergraduate loans, the federal government will no longer cover interest payments during the six months after a student’s graduation.

The post CHN: Student Loan Rates Prevented from Doubling; New Loan Changes Take Effect appeared first on Coalition on Human Needs.

If Congress fails to act, interest rates on Stafford loans will rise from 3.4 percent to 6.8 percent on July 1. According to the Education Department, the passage of S. 2343 would affect 7.4 million undergraduate students borrowing money this year.

The legislation presented by Senate Democrats would cover the $6 billion cost of keeping interest rates low by closing tax loopholes for owners of S-corporations, often attorneys or other professionals.  Compensation paid from the S-corporation is subject to both employee and employer payroll taxes; corporate profits are not.  Some use this tax status to under-report compensation, thereby evading payroll tax payments. Republicans strongly oppose this means of paying for the extension of the low-interest loans.

The House has already passed legislation (H.R. 4628, the Interest Rate Reduction Act) that would prevent student loan rates from increasing. This Republican pay-for strategy uses funds from the Prevention and Public Health Fund in the Affordable Care Act to pay for the extension. H.R. 4628 passed the House 215-195 with thirteen Democrats voting in support and 30 Republicans voting against it. The White House has issued a veto threat for this bill based on the offset, labeling it an effort to undermine health care reform. The Administration called the measure “a politically motivated proposal and not a serious response.”

This measure is not the first threat to low-income students’ educations in recent months. In order to avert a government shutdown, Congress passed a $1 trillion deal (H.R. 3671, the Consolidated Appropriations Act) in December 2011 that made large cuts to Pell Grants for 100,000 students (for more, see this ThinkProgress article). This bill reduced the maximum number of years that students can receive the Pell Grant from nine to six, and reduced the income level under which a student will automatically qualify for the maximum Pell grants from $30,000 to $23,000. Considering this substantial cut, advocates fear that doubled interest rates on Stafford loans would add extra strain on the backs of low-income families.

With the July 1 deadline looming, and bipartisan support for not letting the interest rates double, it is likely that more Congressional action is forthcoming.

The post CHN: No Agreement Reached on Student Loan Interest Rate Debate appeared first on Coalition on Human Needs.

Most of the bill’s details were agreed to five days ago but Democrats delayed signing off on the bill’s conference report with concerns over several ‘riders’ (policy issues not related to funding) and to give more time for negotiations to work out a deal extending the payroll tax and unemployment insurance and addressing the reimbursement rate for Medicare doctors.  (See related article in this Human Needs Report.)

The largest of the non-defense appropriations bill is the one that funds Labor, Health & Human Services (HHS), and Education programs.  It will provide $156.3 billion for FY 2012, $1.1 billion below the FY 2011 level.  Programs critical to low-income families that received additional funding include the Community Services Block Grant, funded at $714 million, an increase of $12 million above last year’s level, Head Start, funded at $8 billion, up $424 million over last year’s level, and the Child Care and Development Block Grant which receives a $60 million increase to $2.3 billion.

Job Training
The final package rejects the deep cuts proposed to job training and education programs in a House draft of the L-HHS-Ed bill released in October that made $2.2 billion in cuts to training, including $1.9 billion to Workforce Investment Act (WIA) formula grant programs.  The final bill includes $150 million in cuts to job training programs in the Department of Labor (DOL), with the bulk coming from reducing funding for the WIA  Dislocated Worker program ($55 million below FY 2011 level) and the Workforce Innovative Fund ($75 million below FY 2011 levels). The bill does not include the proposal in the House draft to eliminate advance appropriations for DOL training programs, which facilitates longer-term planning.

Pell Grants
The news on Pell Grants is not as bad as some had expected.  The maximum Pell Grant award is maintained at $5,550.  The income threshold at which students automatically qualify for the maximum Pell Grant without a more detailed needs analysis (referred to as the “auto-zero”) has been reduced from a $30,000 limit per year to $23,000, which will make it harder for working students to protect income needed for living expenses.  The lifetime eligibility for Pell Grants was reduced from 18 to 12 semesters.

Low-Income Home Energy Assistance LIHEAP
The LIHEAP program received a deep cut in funding, down from $4.7 billion in FY 2011 to $3.48 billion in FY 2012, a 26 percent reduction.  The President’s budget slashed the program even more deeply, requesting only $2.57 billion for the program.  LIHEAP helps low-income families pay their heating and cooling bills.  Currently only a fraction of those eligible for assistance receive it.  Cuts to this program will be devastating for families struggling to balance the need to put food on the table, pay for medicines, and heat their homes.

H.R. 2005 contains an additional 0.189 percent cut to all discretionary accounts.  The House and Senate will also vote on a separate bill, the Disaster Relief Appropriations Act of 2012 (H.R. 3672), which provides $8.6 billion in disaster aid financing.  Republicans want to pay for the aid with another across-the-board cut to most discretionary accounts.  The Senate will likely not adopt the offsetting cut.  By setting up separate votes for the Disaster Relief spending and the offset, the House is allowing the Members to have their chance to show their support for spending cuts to pay for emergency relief, without jeopardizing final enactment of the legislation.

The post CHN: Congress Poised to Pass Omnibus Fiscal Year 2012 Appropriation Bill appeared first on Coalition on Human Needs.

House and Senate appropriators hope to avoid passing another short-term appropriations bill and instead come to agreement by November 18 on a final omnibus bill for FY 2012 that includes funding for all discretionary programs.  Both House and Senate leaders have agreed to accept the total $1.043 trillion overall cap on funding passed in the Budget Control Act on August 2. This represents a $7 billion (non-inflation adjusted) cut from the FY 2011 total, an inflation-adjusted 1.8 percent cut. While working with the same total spending cap will make an agreement easier, still there are differences in the House and Senate bills that could prove difficult to resolve – starting with whether to include offsets for FEMA funding, something that has never happened because of its emergency nature. In addition to differences in funding levels for certain programs, policy riders also loom large.

Negotiators will use the 12 bills as they have been developed to negotiate the final package.  The Senate has passed 11 of the 12 bills in the Appropriations Committee – the Interior-Environment bill has not been taken up.  Senate leadership hopes to take a number of the bills to the floor before omnibus negotiations, hoping to get more leverage in the process.  The House has passed 9 of the 12 bills within the Appropriations Committee and 6 of those have passed the full House.

Labor-HHS-Education:  One of the bills the House has not considered in either the Appropriations full or subcommittee is Labor-HHS-Education.  However, Subcommittee Chairman Rehberg (R-MT) took the unprecedented step of posting on the Committee’s website a draft bill representing his proposals for FY 2012. He does not plan to convene the subcommittee to consider the bill.  The largest bill next to Defense, the Labor-HHS-Education bill, will be one of the most difficult to resolve. The House draft bill for FY 2012 is funded at $153.4 billion, $4 billion below its FY 2011 level and below the Senate bill.  The House draft makes particularly deep cuts to job training programs, decreasing aggregate funding by $2.4 billion or 75 percent while the Senate maintains current funding for the programs.  The House draft also cuts nearly 30 education grant programs.  As controversial as the cuts are the new policy riders in the House bill: prohibiting the use of funds to implement almost any part of the Affordable Care Act; overturning protections of the National Labor Relations Act for workers in many companies now covered; and blocking Education Department rules designed to protect students and taxpayers from for-profit colleges with the worst default records.

Defense:  Funding in the two Defense bills are far apart. The Senate freezes defense spending at its current level of $513 billion and the House increases spending by $17 billion to $530 billion.  Both assume additional spending of $118 billion for the wars in Afghanistan and Iraq.

Agriculture/Nutrition:  The Senate would provide $2.699 billion more in Agriculture Appropriations with significantly more for nutrition programs in the bill; $60 million more for The Emergency Food Assistance Program (TEFAP), $10.5 million more for TEFAP administration funding, $38.3 million more for the Commodity Supplemental Food Program, and $581 million more for the Special Supplemental Nutrition Program for Women, Infants and Children (WIC).  According to appropriators, the $6.582 billion for WIC in the Senate bill would fully fund participation in the program.

Housing:  Advocates are deeply concerned about cuts in several programs that serve extremely low-income households in both the House draft and Senate bills providing funding for the Department of Housing and Urban Development (HUD). Funding for contract renewals for tenant-based rental assistance in the House bill is $17.04 billion and in the Senate bill is $17.14 billion.  The Center on Budget and Policy Priorities estimates that a minimum of $17.37 billion would be needed to prevent households from losing vouchers they are now using to enable them to afford their rent.  Under the House bill an estimated 42,000 vouchers would be lost, with the likely outcome that many would be forced out of their homes. Both bills are well below the President’s request of $2.4 billion for the Public Housing Capital Fund which is barely sufficient to meet accumulating maintenance needs of public housing units. This bill is one reflection of the impact of that cuts to domestic discretionary programs in the name of “deficit reduction” are having.

Another challenge to reaching agreement on final funding for FY 2012 will be pressure from the 53 House Republicans who voted on October 4 against the CR, many of whom are unhappy that the total spending is $24 billion more than adopted in the April House-passed budget resolution.

The post CHN: Congress Passes Short-Term FY2012 Spending Bill appeared first on Coalition on Human Needs.

The bill eliminated funding for Juvenile Justice Demonstration Projects, the Juvenile Accountability Block Grants (JABG) and Title V Local Delinquency Prevention Grants.  According to Fight Crime, Invest in Kids, these three programs were funded at $211 million in FY 2010.  In the current year, Congress has already dropped funding for the Demonstrations Projects ($91 million in FY 2010); the other programs totaled $100 million in this fiscal year.

In addition, spending for Juvenile Justice Delinquency Prevention formula grants to states was cut to $40 million, $22 million lower than the FY11 spending level and $35 million below FY10.

Wolf stated that he and his subcommittee do not think that funding the JJDP Act is an effective use of Justice Department money.

The cuts will reduce support for local juvenile justice programs. JABG funds are provided as block grants to states for programs that provide comprehensive services for youth, renovate facilities, increase court or justice personnel, improve information-sharing, and other system improvements. Similarly important, Title V grants focus on preventing youth at risk and non-serious offenders from entering the juvenile justice system. Byrne Justice Assistance Grants were the only winners, receiving $15 million to prevent delinquency, assist victims of crime and improve criminal justice.

One area that fared better was Mentoring, maintaining the current year’s $83 million funding level (although this too is reduced from the FY 2010 funding of $100 million).

In another funding area of concern to low-income people, the Legal Services Corporation was also cut by over $100 million from the FY11 level, $150 million below the President’s request.

The Violence Against Women Act (VAWA) programs received funding close to FY11 levels, including $3 million for the Children and Youth Exposed to Violence program, which provides grants to projects that seek to mitigate the effects of domestic violence, dating violence, sexual assault and stalking of children and youth.

According to Rep. Wolf, despite the reduction in funding, the bill puts priority on “proven, highest priority programs” including violence against women programs, Byrne Grants, and missing and exploited children programs. However, the deep cuts to juvenile justice will be keenly felt throughout the nation.

At this time it is unclear whether the Senate CJS appropriations subcommittee, chaired by Senator Mikulski (D-MD), will work on a subcommittee bill or whether it will be taken up in a conference or omnibus.

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The difficulty of getting to agreement on appropriations through the end of the year was illustrated on March 9 in the Senate, when votes were held on the House-passed plan (H.R. 1) and on an alternative developed by Chairman Inouye (D-HI) of the Senate Appropriations Committee.  The House FY11 plan failed by a vote of 44-56, with no Democrats voting for it and 3 Republicans voting against it (DeMint (SC), Lee (UT), and Paul (KY), because in their view it did not cut enough).  A majority in the Senate viewed the cuts passed by the House as too extreme, because of its harsh reductions in education, health care, housing, nutrition, employment services, and many other programs.  The Inouye plan was also rejected, 42-58, with no Republican support and 11 Democrats and Independents voting against (Bennet (CO), Hagan (NC), Kohl (WI), Levin (MI), Manchin (WV), McCaskill (MO), Nelson (FL), Nelson (NE), Sanders (I-VT), Udall (CO), and Webb (VA)).  Reasons for opposition were mixed – most wanted more cuts; others, fewer.

The Congressional Budget Office (CBO) estimates that H.R. 1 would cut annual appropriations $92 billion below FY 2010 levels, adjusted for inflation.  The Senate Appropriations Committee alternative would cut $40 billion below the inflation-adjusted FY 2010 funding levels.  While the Senate alternative in most instances avoids cuts to low-income programs, H.R. 1 slashes services.  Among its victims:  218,000 fewer children in Head Start (funding cut nearly $1.1 billion below FY 2010, or 15 percent); 11 million patients losing health care at Community Health Centers ($1 billion cut, or nearly half); 20 million people who use services provided by community action agencies to meet home energy assistance, job training, emergency food, Head Start, and other  needs would see those services disrupted if not lost (Community Services Block Grant cut $305 million, almost in half); more than 8 million adults and youth would lose job training/placement help, essentially shutting down Workforce Investment Act programs until July 2012 (a cut of nearly $3 billion); 10,000 people with disabilities whose housing vouchers now allow them to live in accessible housing would be terminated; and 1.2 million poor households in public housing, whose units will deteriorate due to cuts in the Public Housing Capital Fund (cut by more than $1 billion).  (For more information about the cuts, see CHN’s A Better Budget for All:  Saving Our Economy and Helping Those in Need.)

The Inouye plan also makes substantial cuts below last year’s spending, but makes different choices.  It reduces domestic and international accounts $31 billion below FY 10 (as adjusted for inflation), while H.R. 1 cuts these areas by $85 billion.  The Senate plan cut military/homeland security/veterans services by $9 billion, $2 billion more than the House. (For more details, see Center on Budget and Policy Priorities, In Battle Over 2011 Appropriations, Both Sides Calling for Substantial Cuts.)

Other sources of contentiousness that will complicate final agreement are the presence of many policy riders in the House bill.  These provisions would stop important operations of government by prohibiting expenditures for regulatory functions under current law, including those related to climate change, clean water, financial industry consumer protection, and health care reform.  Riders also would stop federal funds from being made available to Planned Parenthood clinics and would prohibit regulations requiring licensed gun dealers to report multiple sales of assault weapons to the same person.  The Senate bill has no policy riders in its bill.

Domestic appropriations are only about 15 percent of the budget; cuts in them can reduce services for millions of people but cannot make a major dent in the budget deficit.  These cuts can also place further strains on our fragile economic recovery.  H.R. 1 would result in a loss of 700,000 jobs, according to Moody’s Analytics economist Mark Zandi; Federal Reserve Chair Ben Bernanke estimated 200,000 jobs lost.  As concerns grow about our economy’s ability to withstand surging oil prices, Congress will have to decide how much it wants to risk in trying to finish its work on a fiscal year nearly half over.

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