Friday, January 11, 2013

Sequestration & the Fiscal Cliff: What does it mean?

"The U.S. Government is playing Russian roulette with real people’s lives and security."
— John J. Drew, President/CEO, Action for Boston Community Development

On January 1, 2013, the U.S. economy faces a “fiscal cliff” when the combination of draconian spending cuts (“sequestration”) along with the expiration of the original Bush-era tax cuts, a payroll tax decrease of 2 percentage points, and unemployment insurance extensions are set to kick in. The sequestration cuts total $1.2 trillion, split between the military and domestic discretionary spending (government spending for poor and vulnerable citizens).

President Obama and Congress are currently seeking a compromise to avoid going over the fiscal cliff while still increasing revenue and decreasing spending to reduce the debt. It’s a tough deal to negotiate and it must be done by the end of this year.

For Community Action Programs and the low-income children, families and seniors we serve, sequestration means pain…acute pain. The immediate, automatic cuts to this year’s federal budget means a cut of 8.2 percent to most domestic programs, but because the cuts must be squeezed into the last nine months of the fiscal year, it means a 10 percent cut to our programs.

We’re not just talking about federal agencies having to reduce costs and buy fewer military tanks or reduce office staff. This means that huge numbers of the less fortunate among us – the most vulnerable in society – will lose services and programs funded by federal grants. As a result they will hunker down, lose housing and job opportunities, fill shelters and soup kitchens and spend less. Thus, the non-partisan, Congressional Budget Office predicts that if the country goes over the fiscal cliff, recession will return to America.

Deficit reduction should NOT increase poverty or exacerbate hardship for families struggling to make ends meet. Any budget plan must protect key programs that poor families depend on for housing, nutrition, heating their homes, obtaining quality child care, coping with aging issues and helping to meet basic needs during difficult times.

The 10 percent sequestration cut means that the following CAP programs providing vital services and opportunities to poor Americans will be decimated:
  • Head Start – At least 100,000 fewer poor children will receive comprehensive early childhood education services in Head Start, with major negative impact for the children and their families. Head Start provides low-income children with comprehensive educational, health and social services. Parents actively participate in the program, volunteering in classrooms, serving on boards and pursuing educational and career opportunities that benefit the entire family. Many Head Start children attend extended day and full-year programs that enable their parents to work and go to school. Research shows that Head Start children do better in school and life.
  • Fuel Assistance – Approximately 880,000 households will lose fuel assistance, including many seniors and families with small children, making them vulnerable to hypothermia, danger from space heaters and other unsafe heating methods and severely impacting their lives. Increased costs to taxpayers comes from families leaving freezing homes for shelters, fires from unsafe heating methods, hospitalizations, children living in cold homes doing poorly in school, and more.
  • Child Care – It is estimated that at least 100,000 low-income children will lose child care subsidies funded through the Child Care Development Block Grant. Without child care, parents may lose their jobs and the affected families are in danger of sliding into homelessness, food insecurity and other desperate outcomes resulting from loss of income. The end result will be loss of tax revenue and added costs to tax payers as once self-sufficient families must turn to government services.
  • Housing - 2,011,484 families will lose Section 8 Housing Choice Vouchers, sending them, at huge government expense, to shelters and motels already overflowing due to lack of affordable housing. “Section 8” of the Housing Act of 1937 authorizes the payment of rental housing assistance to private landlords on behalf of low-income households. It is a lifeline for millions of working poor families whose income is not high enough to pay the excessive market rents that exist in so many communities.
  • Women’s Health – Hundreds of thousands of low-income women will lose health maintenance and illness prevention services that keep them healthy and save tax payers’ money. Breast cancer screening, HIV testing and many other health measures will be lost to sequestration.
  • Interconnected problems – cuts to one program will cause loss of a host of essential services and opportunities causing an even more devastating “snowball” effect. For example, if a family loses its housing and ends up in a shelter far from their original home, parents may not be able to get to work and will lose their jobs, children will be placed in new schools disrupting their education, physical illness can be exacerbated and emotional damage is often acute. Loss of child care usually means parents lose their jobs with subsequent risk of homelessness and other harsh consequences.

Overall, the cumulative effect of these harsh cuts is that millions of households will be devastated. More people will need services and the services won’t be there. The safety net will be destroyed, along with opportunities to move up the ladder of economic opportunity and pursue the American dream.

The CAP network must come together to fight these cuts and convince Congress, the administration and the American public that deficit reduction cannot take place on the backs of the poor. First, it is inhumane. Second, it won’t work! Cutting programs that make it possible for people to hold jobs, earn a living, stay healthy and pay taxes will NOT reduce the deficit!

By: John J. Drew, ABCD President/CEO