Policy Resource

Budget Action Cascades Toward Deficit Reduction

Apr 18, 2011

Last week saw a cascade of budget-related events in Washington. On Wednesday, the President outlined his vision for getting the federal deficit under control.

On Thursday, wrangling over fiscal year 2011 funding finally came to a close when the House and Senate approved the deal worked out the previous weekend. And Friday, the House approved a Budget Resolution, almost entirely along party lines, that would radically alter major programs for low-income families and create an approach to deficit reduction that would severely constrict services for at-risk children.

To recap:

  • President Obama called for a deficit reduction plan that calls for $4 trillion in reductions over 12 years; a trigger for across the board reductions that would not apply to Social Security low-income benefits, or Medicare; and a balance between spending cuts and tax revenues to reduce the deficit.
  • The 2011 funding agreement would cut $38.6 billion from federal spending. Head Start and child care would get boosts. Other programs such as WIC, community health centers, housing and energy assistance would receive significant cuts, although agencies will work to minimize the cuts’ effects.
  • The House Budget Resolution would turn Medicaid and SNAP into block grants, transform Medicare to a voucher program, institute work requirements, and extract deep cuts from discretionary spending. It also continues tax cuts for the wealthiest Americans. Most significantly, it would limit spending to a set percentage of the nation’s economic output (Gross Domestic Product) and require automatic cuts to achieve that level.

Normally, the Senate would consider its own resolution and the two sides of the Hill would work to reach an agreement or not—the budget resolution is a non-binding agreement, so they don’t have to pass a budget. But this is not a normal year.

The conversation in Washington is now squarely focused on reaching some kind of agreement on a long-term deficit reduction plan. At a minimum, this conversation concerns changes to the large-scale federal entitlement programs and most likely defense spending and taxes as well. What makes the debate so urgent is that reaching a deficit reduction agreement is the price some in Congress have set for voting to increase the country’s debt ceiling.

That ceiling limits the amount the U.S. government can borrow to pay its bills, and the country is about to bump up against it. If the limit is not raised soon, the U.S. will have to default on loans that are coming due for repayment, creating catastrophe in financial markets. So, the debt ceiling—which has nothing to do with how we spend our money—is about to be used as a lever to achieve major budgetary changes.

We are now entering territory not usually traversed by infant-toddler folks. Many of these discussions and bills we need to care about won’t even talk about most programs that help provide a healthy future for babies. Yet, these decisions could significantly affect our ability to respond to the needs of vulnerable infants, toddlers, and their families.

The Baby Blog will do its best to guide you through. Over the next few posts, we will try to explain more about the debt ceiling’s importance to the federal budget battles; the mechanisms being proposed to reduce the deficit; the major changes being floated to programs important to children and families, such as Medicaid; and what all this means for infants and toddlers.

Stay tuned this week to learn what you can do in your state during the Congressional recess.

Read more about: