Debt Deal Passes — Let Congress Know What You Think

Jos G. Linn, RESULTS Domestic Outreach Organizer
August 03, 2011

Below is a summary of the debt deal Congress just passed. It is important that we let our representatives and senators know what we think about it. Per the August Action, please contact your members of Congress to schedule a face-to-face meeting this month during the summer recess. The House has already recessed with the Senate to follow this week; get on their schedules now so you can tell them in person that its time to put away the politics and distractions and get down to the people’s business.

Well, it is finally over... for now. The Budget Control Act of 2011 has passed both the House (269-161) and the Senate (74-26) and now goes to the president for signature. Here are the details of the bill:

  • The bill gives the president the authority to raise the federal debt ceiling by $400 billion immediately and again another $500 billion in the fall. Congress can vote to block the latter increase but the president has veto power over any such block.
  • The bill enacts $1 trillion in budget cuts over the next ten years, which will go into effect beginning in FY 2012. $350 billion will come from security spending (defense, homeland security, foreign operations, veterans’ affairs, etc), the rest from non-defense discretionary spending.
  • House and Senate leadership will appoint a “Super Committee” made of 12 current lawmakers (6 Democrats, 6 Republicans) that will be tasked with finding another $1.5 trillion in cuts, which would correspond with another $1.5 trillion increase in the debt ceiling in early 2012 (essentially raising the ceiling until 2013).
    • The committee can look at any part of the budget to find savings, including cuts to entitlement programs and raising new revenue.
    • The committee must present its recommendations by Thanksgiving 2011.
    • If the committee makes recommendations, they will get an up-or-down vote in both the House and Senate, with no ability to amend or filibuster.
  • If the Super Committee does not come to agreement on at least $1.2 trillion in new cuts, or if Congress fails to enact any recommendations made, a “sequestration” procedure would force automatic across-the-board cuts.
    • 50 percent of the cuts would come from defense spending, 50 percent from non-defense spending.
    • Part of the non-defense cuts would include a cut in payments to Medicare providers (maximum of two percent), but no benefit cuts.
    • Social Security, Medicaid, veterans’ benefits and pensions, the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), payments to federal retirement funds, civil and military pay, and the child nutrition, Supplement Security Income, and women, infants, and children programs, among others would be exempted from any across-the-board cuts.
  • The House and Senate must vote on a balanced budget amendment by the end of the year, but passage is not a condition of raising the debt ceiling.

So let’s first look at what is good in this bill, and there are a few things (but only a few). First and foremost, it averts a U.S. default on our financial obligations. No one knows with certainty of everything that would have happened in the coming days and weeks had there been a default, but most agree that it would have been catastrophic for the economy and most damaging to low-income Americans. Second, many low-income programs we care about (Medicaid, SNAP, child nutrition, the EITC and CTC) will not be touched in this first round of cuts. Third, many low-income programs (but not all) are exempt from any across-the-board cuts if the Super Committee is unsuccessful. Finally, the defense budget faces significant cuts not seen in years, especially if sequestration kicks in.

Now let’s look at the bad, and there’s plenty bad to go around. First and most glaringly, this plan is all cuts. Every dollar of deficit reduction proposed in this bill comes from budget cuts. When all is said an done, Congress could enact $2.7 trillion in budget cuts (over the next ten years) without raising one dime of revenue to help with deficit reduction. Although the Super Committee can raise revenue in its recommendations to Congress, House Speaker John Boehner (R-OH-8) has already said that he will only appoint Republicans to the committee who oppose tax increases. Second, cuts to entitlements like Medicaid, Medicare, SNAP and other programs are on the table. It is true that the sequestration procedure exempts many low-income programs for cuts, but that is not the case for the Super Committee. For the Super Committee, everything is on the table and considering the parties has already agreed to at least $100 billion in cuts to Medicaid before talks broke down two weeks ago, you can bet Medicaid will be the first program targeted. Third, the unemployed get nothing from this deal; it includes no extension of unemployment benefits for the millions of Americans who have already lost or will lose benefits in the coming months. Finally, it proposes trillions of dollars in cuts when the economy is still fragile. Economists from all backgrounds agree that government spending right now is keeping our limping economy moving forward. To cut back on this key stimulus of economic growth invites worse economic times ahead. For more about the good, the bad, and the ugly of the Budget Control Act, see this overview from the National Women’s Law Center.

But the biggest injustice of all may be that this debate took place at all. After years of reckless tax cuts, unfunded wars, and the worst economic crisis in seventy years, Congress decided now, with near 10 percent unemployment, to make deficit reduction the number one priority. They then proceeded to waste months of precious time politicking over it. Much more important issues should have come first. Creating jobs (this deal will cut jobs, not create them), shoring up the social safety net, investing in education, rebuilding our infrastructure are all things that should have come before deficit reduction. Even the polls show that deficit reduction was a low priority compared to jobs and education with the American people. Unfortunately, Congress and the White House chose this path and those few who did speak out for low-income and working America were dismissed and ignored.

So where do we go from here? Now that this debate is over (at least until the Super Committee starts its work after Labor Day), we must move forward to the debate of FY 2012 discretionary spending, which will heat up quickly. Our work on protecting Head Start, Early Head Start, and the Child Care Development Block Grant (CCDBG) will again take center stage and it will take all of us working together to ensure a good outcome. The Budget Control Act does cut domestic discretionary spending by $7 billion for FY 2012. This is not as bad as the Ryan budget, but it still an uphill climb. Fortunately, RESULTS volunteers have never shied away from a challenge. Let’s make sure appropriators know that we expect them to protect low-income families in the FY 2012 budget and the Super Committee, and also let them know how we feel about the debt ceiling debate and final outcome. Meeting with members of Congress in August will be key in sending that message.

TAKE ACTION: Take the August Action. Schedule a time to meet with members of Congress in person to discuss our funding Head Start and child care programs, as well as attend public appearances and town halls. Tell them to talk to House and Senate Labor-HHS appropriators urging them to fund these programs at levels that maintain existing services ($8.1 billion total allotment for Head Start/Early Head Start, $1.2 billion increase for CCDBG in FY 2012). Also tell them that while you are glad that Congress avoided a credit default, you are ashamed of the theatrics that got us here and are very disappointed that the final plan focuses only on spending cuts. Tell them you expect a more balanced agreement from the Super Committee. Remind them that the Budget Control Act demands that middle- and working-class families sacrifice; it is way past time for the wealthy and corporations to do the same.

We also have an online letter you can use to request meetings. Once you get a meeting scheduled (or town hall date and time confirmed), please contact the RESULTS Domestic Staff to help you prepare.

You can also use our updated online alert call members of Congress to express your frustration at how the final debt ceiling bill turned out (all cuts, no revenue) and that you demand a balanced approach going forward.