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
Recommended
