The Fiscal Cliff is Dead. Long Live the Fiscal Cliff!
Ben Miksch, State and Federal Policy Associate
It’s hard to believe that it was only a few days ago that I last posted on this blog about what the new year would bring for sequestration. As you’ve probably seen on the news, Congress approved to step back from the fiscal cliff that had been slated to start on January 1. This is good news, but unfortunately we’re not out of the woods yet.
The question over what to do about the expiring tax provisions has been more or less resolved. The deal did raise some new revenues, although not nearly enough to reduce the deficit by the amount that Congress and the President have said they want. So the protracted revenue versus cuts debate slogs on.
Basically, the deal did not cancel sequestration, but rather postponed it for two months. The more crucial question of whether to avert the devastating sequestration of federal funds and if so, how, remains unanswered. Continuing to loom over us all are the automatic cuts to discretionary spending called for in the Budget Control Act of 2011 that could still devastate affordable housing and homelessness prevention programs in the future.
What Congress has really done is set the stage for yet another showdown.
Right now, three big events are all synced up and will require advocacy action at around the same time: sequestration, the budget, and the debt ceiling. In addition to the automatic sequestration cuts being rescheduled to March 1 the current budget funding the federal government is set to expire on March 27. If Congress is unable to extend the budget, then the federal government will shut down. As if that’s not enough, Treasury Secretary Timothy Geithner announced that the United States reached the limit on how much it can borrow on December 31. He said that he could do some fancy fiscal footwork to keep things working until the beginning of March. But if Congress can’t raise the debt ceiling, while the automatic sequestration cuts are taking place AND the federal government is shutting down, the U.S. will begin defaulting on its sovereign debt. This has never happened before, and it’s not totally clear exactly what would occur if the U.S. did default on its debts owed. But the general consensus is that it would be really, really, really bad. Think global economic meltdown.
We’ll be writing more about this budgetary trifecta later on, and I’ll explain exactly what the debt ceiling is and how it works. The important thing to know right now is that it seems very likely that there will be conservative members of Congress saying they’ll hold the federal government, the U.S. economy, and possibly the world economy hostage in exchange for deep, harmful cuts to social services. This is a false option, and we’ll need to keep fighting to protect our communities.
We must pass a bill halting the sequestration cuts to non-defense discretionary spending. Let’s not cut Social Security or other basic safety net services Americans rely on. If Congress really wants to reduce the national debt, then do so by ending the Bush Tax Cuts for the wealthiest people in our country or by ending the tax loopholes that disproportionately favor individuals and companies that can afford tax lobbyists. Let’s stop pretending that we’re a poor country and realize that we can afford a strong safety net and human services. And we can do this while investing in our people and our country to ensure our economy continues to be the largest in the world.
|We appreciate the temporary reprieve from the harmful social service cuts, and we’re glad for several other parts of the bill as well. For example, one of the things we were fighting for was a critical fix for the Low Income Housing Tax Credit. Senator Maria Cantwell (D), with strong support from Representative Dave Reichert (R-8th District), was instrumental in ensuring the fix was included in the bill. You can read more about that from our allies at the Action Campaign who've been working on these issues for awhile. This will help ensure developers can more easily finance affordable housing projects across the nation.
But we also recognize that this bill does not mean our job is done. We’ve got about two months before we possible drive off another fiscal cliff, and once again a lot of programs that vulnerable people in Washington depend upon are on the line. It looks like we have our work cut out for us.