The bipartisan negotiations on deficit reduction led by Vice President Joseph Biden were stalled when House Majority Leader Eric Cantor (R-VA) dropped out of the negotiations on June 23, followed soon after by the other Republican participant in the negotiations, Senator John Kyl (R-AZ). The negotiations broke down on whether or not an end to tax breaks for corporations and people earning $500,000 or more a year should be applied to deficit reduction, along with spending cuts. Leader Cantor and Senator Kyl insist that anything that increases taxes is off the table. Mr. Cantor called for the President to become involved with the negotiations. This upset occurred after the group increased the frequency of their meetings in order to meet its self-imposed July 4 deadline for producing a deficit reduction plan.
NLIHC joined 22 other national groups in urging the Administration and Congressional leaders to protect programs for low income families and individuals in any deficit reduction agreements. The letter’s signers represent a coalition of nonprofit groups and religious organizations concerned with the welfare of low income households.
“Cuts to programs that help low income people meet their basic needs or provide them opportunity to obtain decent education and employment would inevitably increase poverty and hardship,” the groups write. The letter also notes that a precedent has been set by past deficit reduction packages that not only protected low income households but “reduced poverty and helped the disadvantaged even as they shrank deficits.”
Meanwhile, the Congressional Budget Office (CBO) released new projections on the budget and deficit. The House Budget Committee held a June 23 hearing on CBO’s latest research on the long-term budget outlook. In his testimony, CBO Director Douglas Elmendorf discussed the negative consequences of the nation’s debt continuing to rise over a 25-year period. These consequences include higher interest payments for the government resulting in higher taxes, restriction of policy makers’ ability to respond to national financial or economic challenges, and increasing the likelihood that the nation would experience a sudden fiscal crisis due to lack of investor faith in the country’s financial stability.
The responsibility for the deficit reduction negotiations is now in the hands of President Barack Obama, Speaker of the House John Boehner (R-OH) and Senate leadership. It is not clear if they will be able to come to agreement by August 2, the deadline for Congress to take action on the debt ceiling in order to avoid the nation defaulting on its loans.
View the letter to leadership online at http://www.cbpp.org/ProtectLowIncome.html
View House Budget Committee testimony at http://budget.house.gov/UploadedFiles/623elmendorftestimony.pdf