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2012 Federal Budget Outlook

2012 Federal Budget Outlook. NIHB January 24, 2012 Joan Huffer Center on Budget and Policy Priorities. Federal Debt Under Current Policies is Unsustainable. cbpp.org. Tax Cuts, Wars Account for Half of Public Debt by 2019.

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2012 Federal Budget Outlook

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  1. 2012 Federal Budget Outlook NIHB January 24, 2012 Joan Huffer Center on Budget and Policy Priorities 1

  2. Federal Debt Under Current Policies is Unsustainable cbpp.org NOT FOR DISTRIBUTION

  3. Tax Cuts, Wars Account for Half of Public Debt by 2019

  4. Ryan plan would get two-thirds of cuts from programs for low- and moderate-income people Source: “The Path to Prosperity” FY2012 Budget Resolution

  5. Deficit Reduction Under the Budget Control Act • Cuts discretionary spending by $1 trillion over 10 years through caps on discretionary spending. • Set up bipartisan, bicameral Joint Select Committee to identify additional $1.5 trillion in savings. Failed to reach agreement. • $1.2 trillion in across-the-board cuts (sequestration) begins January 2013 unless Congress acts. cbpp.org

  6. Supercommittee Failure Triggers Sequestration

  7. Sequestration Means Deep Cuts Throughout Budget

  8. Sequestration will be on TOP of Discretionary Caps

  9. Core Low-Income Entitlement Programs Exempt from Sequestration $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)

  10. 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

  11. Fiscal Policies Collide at End of 2012 • 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

  12. Principles for Deficit Reduction • 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 cbpp.org

  13. Past Deficit-Reduction Packages Included Large Revenue Increases

  14. Taxes Do Not Necessarily Harm the Economy or Cost Jobs

  15. 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

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