President Obama Releases 2014 Budget

After a lengthy delay, President Obama finally released his Fiscal Year 2014 budget.  The House and Senate have already passed their respective budget resolutions and no efforts to reconcile them are expected, so the President’s budget will not have an impact on the Congressional budget process.  Still, the budget’s release lays down an important marker for budget negotiations going forward by identifying the President’s priorities and by proposing several key new initiatives.

Overall the budget reduces the federal deficit by $1.8 trillion over the next decade while replacing the sequestration cuts that have gone into effect with a combination of increased tax revenues and spending cuts.  On the revenue side the budget establishes minimum tax rates for those earning more than $1 million (the so-called “Buffet Rule”), raises taxes on carried interest, caps itemized deductions, and increases cigarette taxes.  With respect to spending, the budget would slow the growth in Social Security benefits (known as “chained CPI”), increase some Medicare premiums while cutting reimbursements to drug companies and providers, reduce defense spending, and eliminate agricultural subsidies.

Obama’s budget includes a number of positive proposals for children.  It implements the President’s universal preschool initiative by increasing funding by $1.6 billion for Head Start, child care, and home visitation programs while creating a new $750 million Preschool Development Grant program to partner with states in expanding high quality early learning access.  There is also a new $130 million initiative to bolster mental health treatment and prevention for youth and young adults to make sure those afflicted are able to access needed services.  Promise Neighborhoods and juvenile justice programs receive significant funding boosts while modest increases are also provided to the Women, Infants, and Children (WIC) nutrition program and for family planning.

The budget includes several legislative proposals to improve outcomes for foster children.  A new $12 million grant program is created to address teen pregnancy in the foster youth population.  Youth in foster care have much higher rates of teen pregnancy than their peers and there are currently no federal funds dedicated specifically to this population.  Another proposal prevents states from using child support payments on behalf of foster kids to offset state child welfare costs and instead requires the state to use the funds in the best interests of the child.  Finally, there is a new $10 million grant program created to help victims of domestic sex trafficking, the majority of whom have spent time in the foster care system.

Unfortunately the budget does cut a few important programs.  The Community Services Block Grant is reduced by about half.  Other smaller decreases are included for the Maternal and Child Health Block Grant, community health centers, early intervention services for infants and families through IDEA, and substance abuse treatment and prevention.

*****Update: See the new CWLA Federal Budget Chart for  FY 2014. This chart follows over fifty separate federal programs and shows the funding  level for FY 2013 and the requested level in the President’s FY 2014 budget.

Congress Finalizes the Fiscal Year 2013 Appropriations Process

This week the House and Senate passed HR 933, the Consolidated and Further Continuing Appropriations Act, providing funding to federal agencies for the final six months of the 2013 fiscal year (FY2013).  Passage of the bill prevents a government shutdown and ensures that federal agencies are funded through September 30, 2013.

Though it does leave in place the sequestration cuts that went into effect on March 1, the bill structures how those cuts will go into effect for most agencies, though a very notable exception is the Department of Health and Human Services which will largely operate on an extension of the prior year’s budget authority.  Unfortunately the bill does not include funding sought by the White House to implement the health exchanges created by the Affordable Care Act and to avoid a loss of slots in the Head Start program.  It does however include a $50 million increase in child care funds through the Child Care Development Block Grant (CCDBG), a $33.5 million increase for Head Start to implement reforms to the contracting process, and extends authorization for the Temporary Assistance for Needy Families (TANF) and CCDBG through the end of the fiscal year.

Now that the FY2013 appropriations process has concluded, Congress’ attention will turn to the 2014 process which has already kicked off with the release of the House and Senate budget plans.  President Obama’s budget is expected to be released in the next few weeks as well.

House and Senate Release Competing Budget Plans

This week the House and Senate Budget Committees released their proposed Fiscal Year 2014 budget resolutions.  The two versions offered by House Budget Chairman Paul Ryan (R-WI) and Senate Budget Chairwoman Patty Murray (D-WA) highlight the stark differences between the two parties on how to reduce the federal deficit.

Ryan’s plan in the House would not raise any new revenue from taxes and would in fact lower the top income tax bracket to 25%.  Instead it relies exclusively on spending cuts to bring the budget back into balance.  His resolution would cut $5 trillion over the next 10 years from domestic spending accounts, including $2.7 trillion from health care.  The health care cuts come primarily from his proposal to transform Medicaid into a block grant to states and to repeal the Affordable Care Act, both of which he has suggested in the past.  It is estimated that these health cuts would result in up to 40-50 million Americans losing health insurance, according to the Center on Budget and Policy Priorities.  The House budget would also block grant and cut the food stamp program and impose new work requirements on recipients as well as cut child nutrition program.

Meanwhile Senator Murray’s plan uses a mix of spending cuts and revenue increases to reduce the federal deficit, albeit less aggressively than the House version.  The Senate budget cuts $493 billion from domestic programs over the next decade and cuts spending overall by $975 billion.  It also raises $975 billion in new revenue through changes to the tax code.  These savings are used to replace the harmful sequester that went into effect earlier this month, something that the Ryan plan leaves in place.  Murray’s resolution also provides meaningful increases for child care and the home visiting program.

The House budget passed out of the Budget Committee this week and should hit the House Floor next week, where it is expected to pass.  Likewise the Murray budget passed out of the Senate Budget Committee this week and debate on it by the full Senate is expected to commence next week.  Both budgets passed on strict party-line votes and will have a hard time attracting bipartisan support, further demonstrating the continuing gulf between the two parties on budget issues.

*** On Thursday, March 21st the House passed the Ryan budget on a 221-207 vote and on Saturday, March 23rd the Senate passed the Murray budget 50-49.  It is unlikely that the differences between the two will be reconciled any time soon, so Congress is expected to pivot to the 2014 appropriations process soon without enacting a budget that can pass both chambers. 

Scrambling to Forestall Sequestration

With sequestration scheduled to kick in on Friday, the White House and Senate are stepping up their efforts to prevent the cuts while the House is taking more of a wait and see approach.  The odds of a deal being reached and signed into law by Friday are increasingly remote, meaning that the cuts will likely go into effect at least in the short-term.

This week the Senate will take up a bill to replace the sequestration cuts scheduled for 2013 with other deficit reduction measures.  Such a plan would forestall the sequester for the coming year while buying Congress about 10 months to continue negotiating on an alternative to sequestration over the longer-term.  The Senate bill generates $110 billion in deficit reduction through defense and farm subsidy cuts and new revenue from imposition of the so-called “Buffet Rule” minimum tax on millionaires.  Republicans though have steadfastly rejected using new revenues to offset sequestration, and even if the bill were to clear the Senate it seems unlikely that it would find much support from House leaders.  Meanwhile the House continues to point to the sequestration replacement bill it passed twice last year as its preferred approach, though Speaker John Boehner (R-OH) has said that if the Senate passes a plan the House will try to work with them to find a solution.

Meanwhile President Obama has been barnstorming communities around the country warning about the impact the cuts will have while the White House also released state-specific reports on the human costs of sequestration.  Finally, CWLA has developed detailed charts breaking down the state-by-state financial impact the cuts will have on specific child welfare programs.  We will be covering these charts and providing a sequestration update on a conference call for CWLA members from 3-4pm EST this Wednesday, February 27th.  To RSVP please email Tim Briceland-Betts at bricebet@cwla.org.