Advocates for programs that serve America’s most vulnerable, low income populations gathered forces the week of January 14 as lawmakers continue to debate the federal budget and the nation’s financial future. Meanwhile, the Administration is directing agencies to prepare for the worst.
The Non-Defense Discretionary (NDD) Funding Coalition, a group of organizations representing constituents affected by these spending programs, sent a letter on January 16 to Members of Congress urging them to “support a balanced approach to deficit reduction that does not include further cuts to discretionary programs.” In its letter, the Coalition argues that “NDD programs are not responsible for our growing debt… but have borne the brunt of deficit reduction efforts to date.”
The NDD Coalition also circulated a letter to Congress dated January 15, objecting to an amendment to H.R. 152, the Disaster Relief Appropriations Act of 2013, which would have made across-the-board cuts to discretionary funding in FY13 (see article elsewhere in Memo). The amendment, offered by Representative Mick Mulvaney (R-SC), was not included in the bill.
The NDD Coalition also plans to re-circulate a sign-on letter urging Members of Congress to prevent sequestration and any further cuts to NDD programs, which include HUD and USDA affordable housing programs. The previous letter, sent in the summer of 2012, was signed by 3,000 organizations. NLIHC will let housing organizations know when the letter is available and urges them to sign on to provide crucial support for the protection of HUD and USDA programs from deep cuts in FY13 and beyond.
In the third week of January, Members of Congress sparred over the impending breach of the debt limit, while the Administration began preparing for sequestration implementation and its subsequent funding constraints for the remainder of FY13. In February, the U.S. will reach the debt limit and Congress will need to raise the ceiling in order to avoid default (see Memo, 1/11). The next fiscal challenge begins on March 1 when the President is required to implement sequestration, as across-the-board cuts to discretionary spending programs are known, unless Congress acts to change this requirement.
Members of the House and Senate continued to debate a debt ceiling increase. Early in the week of January 14, Republican leaders indicated they would risk not raising the debt ceiling as part of their negotiation strategy around sequestration.
Treasury Secretary Timothy Geithner responded to these threats. Referring to the country’s obligation to pay for expenditures approved by Congress in a letter to House Speaker John Boehner (R-OH) on January 14, Secretary Geithner wrote, “Failure to meet those obligations would cause irreparable harm to the American economy and to the livelihoods of all Americans…. This is why no President or Secretary of the Treasury of either party has ever countenanced even the suggestion of default.”
By January 18, Republicans had shifted strategy, scheduling a House vote for the week of January 21 on a bill that would increase the debt limit for three months. This was a victory for the Administration. President Barack Obama had stated that he would not engage in negotiations over raising the debt ceiling
The proposed bill would require the Senate to pass a budget resolution during this three-month period and stipulates that pay for Members of Congress be stopped if a budget resolution is not passed. (In the 112th Congress, House Republicans criticized the Senate for not passing an FY13 budget resolution. Senate leadership argued that such a resolution was not necessary, as the Budget Control Act of 2011 took the place of a budget resolution by establishing the top-line spending amount.)
Congressional Democrats argued that the debt ceiling and sequestration should be dealt with separately. Senate Majority Leader Harry Reid (D-NV) and Senators Dick Durbin (D-IL), Patty Murray (D-WA) and Chuck Schumer (D-NY) sent a letter urging President Obama to take “any lawful steps” to ensure that the nation does not default on its debts in February. The Senators write that the Republican leadership’s threats to cause the nation to default on its debts should be ignored, and that the President and Democratic Members of Congress should not negotiate fiscal policy around the debt ceiling. The Senators also think it is important to develop a “broad, bipartisan agreement on fiscal policy that strengthens our economy and reduces long-term budget deficit.” Alluding to impending changes to sequestration, the Democratic leaders said that such an agreement “must treat all Americans fairly.”
Eight Democratic members of the House offered the elimination of the debt ceiling itself as a solution to the debt crisis. Representatives Jerry Nadler (D-NY), Hank Johnson (D-GA), Jim Moran (D-VA), Earl Blumenauer (D-OR), Jan Schakowsky (D-IL), Keith Ellison (D-MN), Betty McCollum (D-MN) and Peter Welch (D-VT) introduced H.R. 290, the Full Faith and Credit Act of 2013, which would eliminate the now-regular debates over whether the U.S. should pay debts already incurred by allowing Treasury to borrow money to pay for debts already incurred without seeking Congressional authorization beyond that provided by spending bills passed by that body.
In a January 14 memorandum to federal department heads, the Office of Management and Budget warns that with sequestration pending and a continuing resolution (CR) on the federal budget lasting only through March 27, agencies should plan for the worst given that it is still not known how much funding will be available for the full fiscal year. OMB warns that if Congress does not avert sequestration, “there will be significant and harmful impacts,” including the loss of education and nutrition services, reduced food safety inspections and air safety and prison security, amongst other critical services, as well as loss of pay for those federal employees who would be furloughed.
Thus, the state of play on the federal budget crisis after the second Inauguration of the President and Vice President is that the immediate crisis of the potential breach of the debt ceiling seems to have been averted. The fight now shifts to the FY13 budget and sequestration, before the debt ceiling comes back up.
View the letter from Senate Democratic Leaders attached.
Click here to view the letter from Secretary Geithner.
Click here to view H.R. 290.
Click here to view the OMB guidance.
Click here to view the NDD Coalition letter on sequestration.
Click here to view the NDD Coalition letter on appropriations.