Federal Update on Deficit/Budget
FYI – Here’s the latest on the deficit/budget crisis and other DC updates from the perspective of the National Association of HUD Tenants (NAHT). There’s some good information here that you may not get from other national updates. There is also a good analysis of the Gang of Six proposal from Bernie’s office at bottom. Capitol Hill update Debt ceiling deadline of August 2, must be raised to avert catastrophe. Obama supports “Gang of Six” budget deal: $3.7 trillion in spending cuts. Bush tax cuts on rich expire, $1 trillion in new revenue by closing loopholes, but tied to lower corporate and individual tax rates. Unspecified “spending cap” through 2015. Major cuts to Medicare, health, Social Security as well as “discretionary” spending. Details still leaking out. 33+ Senators (D’s and R’s) sign letter supporting “deal”. Impossibility of passing detailed law by August 2 (drafting, scoring, passing, etc). Interestingly, Obama’s failed $4 trillion “deal” with Boehner would not have raised as much new revenue ($300 billion vs. $1 billion), signaling Obama willing to cut deeper and tax less than Gang of Six (See CBPP website). House Republicans pass Balanced Budget proposal, favor “Cap and Cut”. Much deeper spending cuts, no tax increases, doesn’t solve deficit; worse than Ryan. Spending cap of 18% through 2021; will squeeze all “discretionary” programs. House leaders so far opposed to “deal” (especially Cantor), but Boehner may be closet supporter. Congressional progressive oppose cuts: Sen. Sanders in Senate, Congressional Progressive and Black Caucuses, Barney Frank. Senate “fall-back” plan would give Obama authority to exceed debt limit, but with promised equivalent cuts, in stages; may be tied to Gang of Six plan, Obama pushing for this, which would drag negotiations on legislation through the fall. Impact on FY 2012 Appropriations for HUD House Appropriations Committee punts FY 2012 cuts ($5.5 billion, or 14% for HUD) until after Labor Day. Senate has taken no action (not even a Budget Resolution) or allocations to committees. Therefore, there will probably be a CR after 9/30. Report on PWG meeting with House Appropriations Dem staff: In FY 2012, House R’s likely to fund rental housing (Section 8 Vouchers & PB) ahead of “capital” spending accounts, as in FY 2011; < if they did not, across the board cuts would mean 600,000 families cut from PH/Section 8> –Probably deep cuts to HOME, CDBG, PH Capital, Section 202 and 811 to get to $5.5 billion –However, if ANY “spending cap” is adopted, in FY 2013 there would have to be cuts to the rental housing accounts, since HUD capital accounts would have been eliminated by then House Dem staff (Joe Carlisle) predicts this could include: a) “partial funding” of Project Based Section 8 (as in 2000’s) although this is an accounting gimmick that kicks the can down the road, would lead to instability, opt outs b) Limiting Section 8 contract rents that are above FMR’s (!) Not mentioned by Carlisle, the “Ryan” budget also proposed rent increases to Public Housing and Section 8 tenants, “time limits” and work requirements for the “able-bodied” Summary of the “Gang of Six Plan” (courtesy of Sen. Bernie Sanders) Provides major tax cuts to the wealthy and large corporations
The Gang of Six plan reduces the top marginal income tax rate for the wealthiest Americans and most profitable corporations from 35 percent to as low as 23 percent (about 34 percent lower than the top tax rates under Bush).
Instead of reforming the Alternative Minimum Tax, it abolishes it altogether providing a major tax cut for the wealthiest Americans.
It reduces the deficit by about $3.7 trillion over 10 years, while providing a net tax cut of $1.5 trillion that will mainly go to the wealthiest Americans and most profitable corporations.
In other words, 100 percent of the deficit reduction achieved by the Gang of Six plan is through spending cuts to Medicare, Medicaid, education, child care, Head Start, LIHEAP, the environment, and other programs that the sick, the elderly, the children, and working families need.
Any tax revenue that is raised by closing tax loopholes for large corporations must be used to lower tax rates.
Revenue raisers cannot be used to increase spending at all. Revenue raisers can only be used to lower tax rates or reduce the deficit.
Reduces the deficit on the backs of the elderly, the children, the sick, and working families.
It imposes undefined spending caps to be in effect until at least 2015 that could only be raised by 67 votes in the Senate.
Immediately reduces Cost of Living Adjustments for Social Security benefits
Even though Social Security recipients haven’t gotten a COLA for 2 straight years, the Gang of Six believes that the formula for calculating COLAs is too generous.
Under their plan, they would ensure that seniors never get a fair COLA by shifting to the Chained-CPI which would significantly understate inflation for seniors.
Under the Gang of Six plan, ten years from now the typical 75 year old will see their Social Security benefits cut by $560 a year, and the average 85 year old will see a cut of $1,000 a year.
Cuts Medicare by at least $298 billion over 10 years.
Holds Deficit Reduction Hostage to Cutting Social Security benefits
If the Gang of Six deficit reduction plan receives 60 votes, it will not be sent to the House until and unless the Senate also adopts a plan to reform Social Security so that it is solvent for the next 75 years.
If 60 Senators don’t vote to approve an undefined 75-year Social Security solvency bill, the deficit reduction plan dies, even if 60 Senators voted to approve it.
Social Security is solvent for the next 25 years. No other government program can make that claim.