2012 Federal Budget Outlook

2012 Federal Budget Outlook

NIHB

January 24, 2012

Joan Huffer

Center on Budget and Policy Priorities

1

Federal Debt Under Current Policies is

Unsustainable

cbpp.org04/22/23 2NOT FOR DISTRIBUTION

Tax Cuts, Wars Account for Half of Public Debt

by 2019

04/22/23 3

Ryan plan would get two-thirds of cuts from programs

for low- and moderate-income people

4Source: “The Path to Prosperity” FY2012 Budget Resolution

1. Cuts discretionary spending by $1 trillion over 10 years through caps on discretionary spending.

2. Set up bipartisan, bicameral Joint Select Committee to identify additional $1.5 trillion in savings. Failed to reach agreement.

3. $1.2 trillion in across-the-board cuts (sequestration) begins January 2013 unless Congress acts.

Deficit Reduction Under the Budget

Control Act

04/22/23 5 cbpp.org

Supercommittee Failure Triggers Sequestration

04/22/23 6

Sequestration Means Deep Cuts Throughout

Budget

04/22/23 7

Sequestration will be on TOP of

Discretionary Caps

04/22/23 8

$1.2 trillion across-the-board spending cuts will not affect:• Medicaid and Children’s Health Insurance Program• Supplemental Nutrition Assistance Program (Food Stamps)• Child Care Entitlements (mandatory) • Child Nutrition• Earned Income Tax Credits (EITC), Child Tax Credit (CTC), ACA

Premium Credits [but NOT cost-sharing subsidies]• Supplemental Security Income (SSI) • Temporary Assistance to Needy Families (TANF)

04/22/23 9

Core Low-Income Entitlement Programs

Exempt from Sequestration

Short-term threats

• UI benefits, weeks could be cut back• Cuts to health care programs to pay for SGR• Shielding defense from sequestration without

revenue savings could lead to:- Loss of exemption for some low-income

programs- Increased cuts to NDD

10

Fiscal Policies Collide at End of

2012

11

• 2001-2010 tax cuts expire at end of 2012

• $1.2 trillion sequestration scheduled to begin in January 2013

• Debt ceiling may need to be raised by early 2013

• FY2013 Appropriations bills may or may not be completed

Principles for Deficit Reduction

cbpp.org

• Balance primary budget, stabilize debt to GDP.

• Need a balanced approach: everything must be on the table

• Should not increase poverty or inequality

• Boost economy in short-run

04/22/23

Past Deficit-Reduction Packages Included Large

Revenue Increases

13

Taxes Do Not Necessarily Harm the Economy or Cost

Jobs

14

Helpful Resources

• Office of Management & Budget (OMB)– www.whitehouse.gov/omb

• U.S. Senate Budget Committee– http://budget.senate.gov

• U.S. House Budget Committee– http://budget.house.gov

• Congressional Budget Office (CBO)– www.cbo.gov

• THOMAS – Library of Congress– http://thomas.loc.gov

• Center on Budget and Policy Priorities– www.cbpp.org