The Office of Management and Budget (OMB) issued a July 31 memorandum to federal agencies stating the Administration’s position against sequestration and instructing agencies not to take action in anticipation of the cuts. As a result of the Budget Control Act of 2011 (BCA), non-defense discretionary programs face 8.4% across-the-board cuts, known as sequestration, in January 2013.
“The President has made clear that the Congress should act to avoid such a sequestration. If allowed to occur, the sequestration would be highly destructive to national security and domestic priorities, as well as to core government functions,” wrote OMB Director Jeffery Zients in the Administration’s memo.
The memo also says that “sequestrable amounts can only be calculated once FY 2013 funding levels are known; therefore, shortly before any sequestration order is issued, OMB will collect information from agencies on sequestrable amounts and, where applicable, unobligated balances, and calculate the percentage reductions necessary to implement the sequestration.” Now that the Administration has agreed to postpone final FY13 spending decisions until March of 2013 with a six-month continuing resolution (CR), calculating final FY13 spending totals will not be feasible until several months into 2013 (see related article in this issue of Memo).
The memo concludes with instructions that “in the meantime, agencies should continue normal spending and operations since more than 5 months remain for Congress to act.”
The President has yet to sign H.R. 5872, the Sequestration Transparency Act of 2012, passed by both the House and Senate in July. The act would require OMB to describe how programs, projects and activities would be reduced under current law to achieve the sequester’s impending cuts (see Memo, 7/27). The Zients memo, issued after H.R. 5972 was passed, suggests that the Administration’s interest in complying with the act may be minimal.
HUD’s rental assistance programs are among those that face sequestration. In addition to caps on discretionary spending of almost $1 trillion over ten years, the BCA will also impose an additional $1.2 trillion in cuts to discretionary programs. Such cuts would be devastating to HUD’s programs and would be of a magnitude that would render it impossible for HUD to manage them such that the agency could still provide rental assistance to 5.5 million households currently served by its programs.
The Center on Budget and Policy Priorities currently projects that around 185,000 vouchers would be lost in FY13 if sequestration were implemented. In addition, the National Alliance to End Homelessness predicts that 145,000 people would be homeless instead of housed in FY13 if sequestration takes effect.
The House and Senate each took votes on tax bills and crafted plans to deal with end of the year expiring tax provisions the week of July 29. The House passed H.R. 8, the Job Protection and Recession Prevention Act of 2012, on August 1. The following day, the House passed H.R.6169, the “Pathway to Job Creation through a Simpler, Fairer Tax Code Act of 2012.” Both bills would allow extension of expiring tax cuts for the highest income households.
The Senate Committee on Finance reported a package of tax extenders on August 2 (see related article in this issue of Memo). The package could indicate a potential for bipartisan cooperation in the Senate on these measures.
NLIHC is working with a broad group of non-defense discretionary (NDD) stakeholders in an NDD Coalition. This coalition organized a letter to Congress signed by more than 3,000 local, state and national organizations. “We strongly urge a balanced approach to deficit reduction that does not include further cuts to NDD programs, which have already done their part to reduce the deficit,” the letter said. For NLIHC and many other groups, “balanced approach” refers to the necessity of not extending the Bush-era tax cuts for households with the highest incomes, those at the top 2% with incomes more than $250,000 a year. Congress must be persuaded that it is politically more acceptable to not extend these tax cuts than it is to cut non-defense discretionary programs.
The NDD Coalition will release a toolkit later this month to help advocates educate their members of Congress on sequestration’s impact on non-defense discretionary programs. The Campaign for Housing and Community Development Funding is compiling a list of figures detailing sequestration’s impact on housing and community development programs.