Lame Ducks, Grand Bargains, Punts and Cliffs NASBO Fall Meeting Friday, October 5, 2012 Alexandria,...
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Transcript of Lame Ducks, Grand Bargains, Punts and Cliffs NASBO Fall Meeting Friday, October 5, 2012 Alexandria,...
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Lame Ducks, Grand Bargains, Punts and Cliffs
NASBO Fall MeetingFriday, October 5, 2012Alexandria, VA
Federal Funds Information for States
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Where we Left Off in August: What’s the Conventional Wisdom?
For appropriations, a CR until the election, BUT…
For BCA, agreeing to postpone the day of reckoning, BUT…
For expiring tax provisions, a bruising fight, possibly informed by the election.
For authorizations, probably nothing, BUT...
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Six-Month Continuing Resolution
Through March 27, 2013FY 2012 + 0.612% for most discretionary
programs (not highways)Mandatory programs: current-law levelExtends SNAP, TANF, related programsAdditional funds for a few programs
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The BCA and the Sequester
Absent a legislated alternative, a sequester will occur on January 2, 2013
Many mandatory and a few discretionary programs are exempt– OMB report sheds light on its interpretations
OMB estimates of ATB cuts: 8.2% (nondefense discretionary), 7.6% (nondefense mandatory), 9.4% (defense discretionary)
ATB reduction applied to FY 2013 funding in effect on January 2, 2013 (CR level)
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Lame Duck Possibilities
Policy Grand Bargain Punt CliffFY 2013 Appropriations Unclear Leave for new Congress N/A
BCA Sequester Replace/modify Extend deadline Implement sequester
Expiring tax provisions:
2% payroll tax Probably extend Extend Expires
Bush-era rates Maintain for <$250K Extend Expire
AMT Permanent fix Extend Expire at their peril
Debt Limit Raise Small increase No agreement
Expiring legislation:
Farm bill (nutrition after March) Reauthorize or not Extend No agreement
TANF (after March) Reauthorize or not Extend No action
Medicaid QI, TMA Reauthorize or not Extend Expire?
UI EUC/EB Reauthorize or not Extend Expire
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CBO Estimates the Fiscal Cliff
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
2011 2012 2013 2014 2015 2016 2017
$ in
bill
ions
Fiscal Year
The Fiscal Cliff
Revenues Expenditures
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Sequester Coverage Status of FFIS VIP Series Programs
67% Covered
33% Exempt
Both2%
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Sequester Coverage Status of FFIS VIP Series Funding
Covered18%
Exempt82%
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Grand Bargain Revenue Options
Go after tax expenditures, including:– Itemized deduction for S/L taxes– Make S/L bond interest taxable– Curb or eliminate mortgage deduction– Curb or eliminate tax exclusion for employer-provided
health insurance Changes in tax brackets, capital gains, AMT, etc. Create federal sales tax or VAT
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The “Other” Federal Spending: Tax Expenditures
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$ i
n m
illi
on
s
25 Largest Federal Tax Expenditures Cost $870 Billion in 2010
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Grand Bargain Spending Options
Modify Medicaid’s financing structure; other changes to mandatory programs
Statutorily limit health spending growth More block grants (Medicaid and SNAP) Consolidate programs (job-training) Reduce/eliminate funding for select programs
(Pell grants, housing, abandoned mine payments) Move all S/L workers into Social Security
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What’s the Conventional Wisdom?
There is none! For more information, visit:
www.ffis.org Or contact: Marcia Howard
Trinity [email protected]