Saturday, January 05, 2013

'Fiscal Cliff' Deal: The Aftermath

From Feeding America's Facebook page
With a sigh of relief, we watched members of House of Representatives in the 112th Congress approve an emergency budget deal between President Barack Obama's administration and the Senate.

The deal, which passed the Senate 89 to 8 and the House 257 to 167, extends most of the tax cuts that technically expired on Dec. 31.

The agreement is mostly good for low-income people in our country because it includes a five-year extension on improvements made to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) over the last decade, providing support to low-income working families. Preserving these tax credits was part of Bread for the World Offering of Letters in 2012.

"Republicans have been trying to limit the reach and effectiveness of both of these tax credits all year (and some Democrats indicated an openness to that position, especially with regard to the CTC)," said columnist Greg Kaufman, who writes about poverty issues for The Nation magazine. "Getting a five-year extension on both—as well as for the American Opportunity Tax Credit that helps make college tuition more affordable—was certainly not a given heading into these negotiations."

Kaufman said the decision of Congress not to cut food stamp benefits represents another victory.  "A program that responded to the recession exactly as it was designed to do—lifting nearly 4 million people above the poverty line in 2011—was facing proposed cuts of $12 billion in the House and $4 billion in the Senate," said Kaufman. "It was feared in recent months that cuts might be included in any “Grand Bargain” at a moment when one in five children experience hunger. Instead, activists, advocates and political leaders continue the fight to protect and strengthen the program."  Read Kaufman's article,‘Cliff’ Deal is a Decent Start for Low-Income Americans.

Creating a Circle of Protection around domestic nutrition programs was also part of Bread's 2012 letter-writing campaign.

A third important decision that Congress made in the deal was to  extend emergency unemployment benefits for one year, preventing an estimated 2 million people from losing unemployment benefits just a week after Christmas.

Anti-Poverty Advocates Generally Pleased
Many organizations that serve or advocate on behalf of low-income people welcomed the House vote on New Year's Eve.

“The imperfect deal that Congress approved is far from a comprehensive deficit-reduction plan that puts the country on a fiscally sustainable course,” said Bread for the World President David Beckmann. “However, it steers clear of a tax increase for the majority of tax payers, thus reducing the economic risk of going over the fiscal cliff. It also protects unemployment insurance and tax credits for low-income working people.” Read more in Fiscal Deal Minimizes Negative Impact on Poor People

"This year-end deal is a good step forward for working poor families," Sister Simone Campbell, executive director of the Catholic Social Justice lobby NETWORK and the organizer of the Nuns on the Bus campaign, said in a comment posted on The Nation.

Feeding America, in its Facebook page, posted a Thank You note to Congress for protecting SNAP benefits.

So what else is in this budget agreement?  The Washington Post blog crated  gives us the Fiscal Deal Cheat Sheet.

Here are a few of the highlights.

— The 2009 expansion of tax breaks for low-income Americans: the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit will be extended for five years. \
— Federal unemployment insurance will be extended for another year, benefiting those unemployed for longer than 26 weeks. This $30 billion provision won’t be offset.
— A nine-month farm bill fix will be attached to the deal, Sen. Debbie Stabenow told reporters, averting the newly dubbed milk cliff
— The sequester will be delayed for two months. Half of the delay will be offset by discretionary cuts, split between defense and non-defense. The other half will be offset by revenue raised by the voluntary transfer of traditional IRAs to Roth IRAs, which would tax retirement savings when they’re moved over.

It's Not Over
That last point is reason for concern.  The decision does not avoid, but merely delays, a sequester involving across-the-board budget cuts. “The sequester would impact our development efforts overseas, reducing vulnerable peoples’ access to vital food aid,” warned Beckmann. “It could also result in hundreds of thousands of low-income women and young children losing WIC benefits here in the United States.”

"Now that there has begun to be a little balance of raising revenue to offset the tremendous cuts in domestic spending already made in earlier deals, the next deal should be based on $1 of additional revenue for every $1 of cuts," said Sister Simone Campbell. 

This means that the newly installed 113th Congress, which took office on Jan. 3, has a lot to accomplish between now and the beginning of March.  Read more about what lies ahead  from Slate magazine.  And stay tuned for updates about opportunities to stay in touch with Congress over the next several weeks.

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