NC Budget and Tax Center

US House approves federal budget deal, Senate poised to pass

On Monday evening, US House and Senate budget negotiators reached agreement on a detailed $1.012 trillion budget deal that would fund the federal government through the end of September. The House approved the measure yesterday, with the Senate expected to pass the measure later this week. If enacted, the measure would end the looming threat of another government shutdown and roll back the harmful across-the-board spending cuts scheduled to take place over the next year.

The measure fills in the details of a bipartisan agreement struck last month that, as my colleague wrote at the time, represents a “missed opportunity” because it fails to replace the across-the-board spending cuts in the out years and fails to include any new tax revenue.

The detailed budget plan doles out discretionary (i.e., non-entitlement) funding to a variety of government programs—everything from food safety to education to housing to veterans’ benefits. As illustrated in the chart below, the budget deal (last column) is higher than the harmful sequestration levels in fiscal year 2013 (first column) but lower than President Obama’s budget proposal (second column). A list of specific cuts and expansions are listed here.

Congressional Quarterly, Overview of Fed Budget Deal_January 14

 

Noteworthy, the budget deal spends $53 billion, or 10 percent, less than President George Bush’s last discretionary budget that was approved in 2008. Despite population growth and increased need, this reduction reflects years of budget cuts to important domestic programs—such as K-12 education, affordable housing, food safety inspections, and research and development—rather than a balanced long-term solution to our nation’s budget challenges. Since 2011, almost 70 percent of debt reduction has come from spending cuts.

Rather than accept another harsh round of spending cuts to these programs, Congress should seriously consider closing corporate tax loopholes as a way to raise new revenues. The Stop Tax Haven Abuse Act seeks to do just that by closing a number of loopholes that allow American-based corporations to avoid paying taxes on the incomes they stash in overseas accounts. Any revenue raised from closing loopholes should be used for new investments and deficit reduction.

It is worth lifting up three clear wins for low-income families in the budget. Last year, the Head Start program was forced to drop children from its rolls due to the across-the-board cuts, but under this new measure, the program would receive $8.6 billion, completely reversing the cuts. The measure also restores cuts to the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) to levels that are sufficient to meet anticipated need. Lastly, the Section 8 housing program for low-income families would receive funding levels above the pre-sequestration 2013 levels. This reverse in spending comes late for the families who were denied services last year due to budget cuts, but it’s a good start.

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