“Fiscal Cliff” Deal Protects EITC, CTC, SNAP (Food Stamps), and Early Childhood Programs

Meredith Dodson, Director of U.S. Poverty Campaigns
January 02, 2013

As you’ve undoubtedly heard, Congress has passed a deal to address the “Fiscal Cliff”. Early New Years Day, the Senate voted 89-8 in favor of The American Taxpayer Relief Act of 2012, which the House then passed 257-167. Counting interest savings, the package includes about $750 billion in new revenues over the next 10 years with minimal spending cuts.  Some of the specifics of what is in the deal:

  • Improvements in the Earned Income Tax Credit(EITC) andChild Tax Credit(CTC), and college American Opportunity Tax Credit that were enacted in 2009 are extended for 5 years.Given that this was a major focus for RESULTS volunteers, we are pleased that these key provisions are continued but disappointed distressing that they were not made permanent like the other income tax provisions.
  • Expiration of the payroll tax cut, costing a $50,000 earner about $83 a month.
  • An extension of the Farm Bill until September without deep cuts to SNAP (formerly food stamps). Unfortunately, there are some cuts to nutrition education programs in 2013 and SNAP is vulnerable to deep cuts in upcoming rounds of deficit reduction.
  • Unemployment Insurance for Americans facing long-term unemployment was extended for one year, sparing 2 million jobless people from going without benefits starting at the beginning of January, and 5 million people by the end of the year.
  • Two-month delay of sequestration, the automatic cuts to annually appropriated programs such as Head Start, child care assistance andstrategic, compassionate,poverty-focused foreign assistance.

If you need a history of how we got to this point or are just in need of some entertainment, check out this recap on the Washington Post’s Wonkblog. It’s important to remember that this latest deal is really just part of a three-component deficit reduction process:

1.       The Budget Control Act (August 2011): $1.5 trillion in spending cuts (to appropriations including education, housing, community services, energy, environment, etc., as well as the Pentagon). 

2.       The package passed this week, which is almost all from revenues but

3.       Mid-late February: another $1 trillion or so in deficit reduction. We hope this is balanced, but fear that we could see further cuts to critical anti-poverty programs such as SNAP, Medicaid, and tax credits for low-income families.

There are differing views of this deal. As our friends at the Coalition on Human Needs flagged, “the new revenues are simply inadequate to the task of long-term deficit reduction.  Because the debt ceiling was not raised, and is expected to get to crunch time by the end of February, the next round of replacing the sequestration (across-the-board) appropriations cuts will be decided in the midst of House proposals to tie increases in the debt ceiling to spending cuts.” But, The Nation’s Greg Kaufmann is “troubled by the lack of attention being paid to how this deal benefits the more than one in three Americans living below twice the poverty line — earning less than $36,000 annually for a family of three, and the 46 million Americans living below the poverty line (less than $18,000 annually for a family of three).”   

We’ll be analyzing the deal and strategizing about the ways you can most effectively influence the process ahead in the coming days – stay tuned for more details and suggested actions for the new Congress.