CBPP: Robert Greenstein: Next Round of Deficit Reduction

Source:Center On Budget & Policy Priorities President Robert Greenstein.

"In recent days, policymakers, pundits, and the media have debated whether the “fiscal cliff” budget deal was a victory or defeat for the President or congressional Republicans, progressives or conservatives, rich or poor, the economy or the deficit — you name it.  Most of the commentary is unpersuasive, however, for one basic reason:  the fiscal cliff deal is only one stage in a broader budget battle, and you can’t render a legitimate judgment on that effort until the next stage — which includes the scheduled across-the-board spending cuts known as “sequestration” and, especially, the need to raise the debt limit — is completed.

What’s important at this point is not assessing winners or losers but, instead, understanding what lies ahead.  That’s because what lies ahead is truly frightening.  Indeed, it could (though it doesn’t have to) produce outcomes that are far more damaging to the economy, sound fiscal policy, and low-income and vulnerable Americans than anything that policymakers and experts feared from the fiscal cliff.

So, let’s look ahead to the next 60 days and their potentially monumental ramifications for our country, our economy, and our people.

The Big Challenges and Threats

As many fiscal policy analysts agree, policymakers must generate sufficient deficit reduction to achieve the key economic goal of stabilizing the debt over the coming decade so that it stops rising faster than the economy grows.  Policymakers generated about $1.7 trillion in deficit reduction in 2011 ($1.5 trillion in discretionary spending cuts, plus the associated interest savings, primarily through the Budget Control Act, or BCA).[1]   That left a need for another $2 trillion in deficit reduction to stabilize the debt.[2]

Entering the fiscal cliff negotiations, there were two main barriers to achieving deficit reduction in an equitable and balanced manner that honors the principle, as enunciated by the National Commission on Fiscal Responsibility and Reform (“Bowles-Simpson”) and reflected in major deficit-reduction deals of recent decades, that deficit reduction shouldn’t harm low-income and vulnerable Americans or increase poverty — and that doesn’t disrupt the economy:

Apparent Republican unwillingness to raise taxes; and

The destructive notion, sometimes called the “Boehner rule” (for House Speaker John Boehner), that Congress should only raise the debt ceiling if it’s accompanied by at least a dollar in new spending cuts for each dollar that the debt limit is raised.[3]   Under this rigid formula, cuts in programs that are critical for future economic growth or that serve the nation’s poorest people count, while savings from curbing unproductive, special-interest tax subsidies do not. 

Moreover, the Boehner rule would require the most radical transformation of government in nearly a century; if policymakers enacted all of the cuts in the severe, House-passed budget of House Budget Committee Chairman Paul Ryan, they would still eventually fall short of adhering to the Boehner rule.  They would have to eliminate more and more of the basic functions of government over time.

The Lost Opportunity

The fiscal cliff negotiations appeared to offer a singular opportunity for more rational, balanced, and comprehensive deficit reduction.

Republicans needed the agreement of President Obama and the Democratic-run Senate in order (1) to extend President Bush’s tax cuts (which were scheduled to expire at the end of 2012), including any tax cuts that Republicans could salvage for people who were making over $250,000 a year, and (2) to preserve as much as they could of the estate-tax break for the nation’s wealthiest estates that Republican leaders extracted from the President in their negotiations over the year-end tax bill of 2010.

The White House’s challenge was to use this leverage to broker a larger deal that contained enough deficit reduction to stabilize the debt over the coming decade, secured an adequate revenue contribution toward that goal (one that extended well beyond the revenues generated just from letting the Bush tax cuts expire for people making over $250,000), and raised the debt limit for at least several years.  That’s what the President tried to achieve in his December negotiations with Speaker Boehner.

At one point, Obama and Boehner appeared close to agreement, with Obama close to achieving his goals.  But then Boehner, pressured by other House Republicans, blew up the negotiations and opted for “Plan B.”

After Plan B’s demise, negotiations resumed — but on a very different playing field.  Gone was any discussion of raising the debt ceiling or of a larger deficit-reduction package.  Instead, the two sides opted for a deal that raises income, capital gains, and dividend taxes only on couples making over $450,000 ($400,000 for singles); limits itemized deductions and phases out personal exemptions for couples making over $300,000 ($250,000 for singles); makes permanent most of the estate-tax break originally enacted in 2010; extends improvements in the Child Tax Credit and the Earned Income Tax Credit for low-income working Americans, and in the American Opportunity Tax Credit for middle- and lower-income college students, for five years;[4] extends federal emergency unemployment insurance benefits for a year; and delays sequestration for two months.  All told, the deal makes permanent 82 percent of the Bush tax cuts.[5]

Consequently, the playing field for the next round is very different.  It’s a terrain filled with land mines and enormous danger.

The Next Round

The nation faces three related and very daunting challenges in the next round, all of which will play out over the next two months.

Achieving further deficit reduction:  The President and Republican congressional leaders both seek more deficit reduction, but they are miles apart on how to get it.  The White House notes that policymakers have already enacted large cuts in discretionary spending, which amount to $1.5 trillion over the next ten years (as compared to the fiscal cliff deal’s approximately $600 billion in revenue increases).  Quite reasonably, the White House calls for a dollar in additional revenue increases for each dollar in additional spending cuts.[6]

Republicans, however, have already declared that they flatly reject this concept.  Although Speaker Boehner offered $800 billion in revenue increases in his 2011 negotiations with President Obama and indicated that he’d go somewhere close to $1 trillion in the recent negotiations, Republican leaders now insist that “the tax issue is off the table,”[7] “the tax issue is finished, over, completed,”[8] and they won’t agree to a dollar more in tax increases beyond the roughly $600 billion just enacted.  They insist that all of the additional deficit reduction must come from budget cuts.  They say that, with the bulk of the Bush tax cuts now permanent, President Obama no longer has any leverage over them in the tax-raising arena.

Averting sequestration:  Sequestration will hit March 1 unless the President and Congress delay it further or replace it with something else.  Republicans are insisting that policymakers must replace every dollar of across-the-board cuts that’s cancelled with a dollar of spending cuts.  The White House, consistent with its dollar-in-taxes-for-a-dollar-in-spending principle, wants to replace sequestration with a package that includes equal amounts of revenue increases and spending cuts.

Raising the debt limit:  Most important, many Republicans insist that they won’t raise the debt limit unless legislation to do so is accompanied by massive spending cuts.  To raise the debt limit by, say, $1 trillion — enough for about one year — would require $1 trillion in spending cuts under their “Boehner rule.”  To raise the debt limit to last two years would require about $2 trillion in spending cuts.

The debt limit fight is key — key to the future of the economy, the budget, and programs for low-income and disadvantaged Americans.  The White House and some Democratic congressional leaders signaled a willingness to “go over the fiscal cliff” and into January if they could not reach a satisfactory budget agreement with congressional Republicans by December 31.  They believed that, if in place a few weeks and then cancelled, the tax increases and spending cuts that the fiscal cliff would trigger would not harm the economy in a substantial, lasting way.

But, Administration pronouncements on the dangers posed by failing to raise the debt limit suggest that the White House appropriately views those consequences as far more dire, for failure to raise the debt limit so that the federal government can pay its bills would eventually trigger a default, potentially sending interest rates on U.S. securities permanently higher and possibly even causing a global financial crisis.  Moreover, the President has said that he lacks authority, as some constitutional scholars have proposed, to invoke the Constitution’s 14th Amendment and essentially ignore the debt limit.

All of this greatly emboldens Republicans, who appear to believe that they are in a much stronger position in this evolving fiscal contest.  They believe that by holding the needed debt-limit increase hostage and threatening economic chaos if their demands aren’t met, they can bring Obama and Democrats to their knees — forcing them to accept very big spending cuts without any revenue increases, as they did in the debt-limit crisis during the summer of 2011.

The President has said that he will not negotiate fiscal policy as a condition for raising the debt limit, a very well-justified stance if you believe — as I do — that it’s grossly irresponsible for legislators of either party to hold the debt limit hostage and threaten economic chaos if they don’t get their way.[9]   But whether the President can secure a debt limit increase — which will require 218 votes in the House and 60 in the Senate — without acceding to huge spending cuts is unclear at this point.  Tea Party Republicans think this is their best chance in ages to secure big cuts in core New Deal and Great Society programs.  And with Republicans seemingly committed to this course (and nursing their wounds over the fiscal cliff deal) and the President maintaining that he won’t be blackmailed, the likelihood of a harrowing showdown — one that threatens the economy far more than the fiscal cliff ever did — is very high.

Why Low-Income People Are at Heightened Risk

Some Democrats dismiss the threat that the Boehner rule poses, saying that Republicans ultimately will back off of it because they won’t publicly identify the specific program cuts they would make to produce the savings that would raise the debt ceiling for a reasonable period of time.  That view, alas, is mistaken.

To be sure, Republican congressional leaders seem unwilling to propose specific cuts in the two main, popular middle-class entitlement programs — Medicare and Social Security — that would produce large savings over the next ten years.  They want Democrats to propose such cuts, or at a minimum, they want to find a way to put some Democratic fingerprints on them.

But, Republican leaders appear more than willing to specify deep cuts in two other parts of the budget — core entitlements for low-income Americans, like Medicaid and SNAP (formerly known as food stamps), and the annual caps on funding for non-defense discretionary programs.[10]   The Ryan budget featured trillions of dollars of cuts in these two areas.[11]   House Republicans may well try to pass legislation in February to raise the debt limit for a year or so, accompanied by cuts primarily in low-income assistance programs and in the caps on non-defense discretionary programs.  They will likely re-pass, in the new Congress, the legislation that they passed twice in the last Congress (most recently on December 20) to cancel the first year of sequestration and replace it with spending cuts that hit low-income programs disproportionately.[12]

These battles, just starting, will be brutal.  Attacks that disparage or demonize programs for low-income and vulnerable Americans may escalate in the weeks ahead in an effort to help lay the groundwork for this strategy.

It’s not clear how policymakers will resolve these showdowns.  The President’s ability to tie an extension of various Republican-backed tax cuts to an agreement on a larger balanced package — one that also raises the debt limit and averts sequestration — now is gone.  How the President can secure needed Republican votes in the Senate and House for measures that raise additional revenues — and for measures that raise the debt limit outside of the harsh and regressive confines of the Boehner rule — is very unclear.

But facile assumptions that President Obama will simply roll over in the face of these pressures seem quite unrealistic.  So, an extremely high-stakes confrontation — one that could culminate in an actual default, a government shutdown, or even a constitutional crisis — is definitely not out of the question.

What lies ahead will likely dwarf the fiscal-cliff dramatics that the nation has just witnessed.  Our leaders, our system of government, and the patience and wisdom of the American people will be severely tested.  And, for no one will the stakes — and the risks — be higher than for the tens of millions of our least fortunate citizens, those who lack the luxury of well-connected lobbyists and the access that big campaign contributions bring to help protect them on Capitol Hill in the dangerous weeks ahead." 

From the Center On Budget & Policy Priorities

Thom Hartmann: 'What Could Have Been & What Was'

Source:Thom Hartmann with a look at the Republican run U,S. House of Representatives.

"Thom Hartmann takes a look back at the Republican controlled House of Representatives and compares their legislative record with that of the Democrats from 2 years ago." 

From Thom Hartmann

If you are familiar with the phrase elections have consequences, then you know where I'm going with this. 

I have no doubt if the Democratic Socialists of America, or the Green Party, somehow controlled the House of Representatives, instead of representing maybe 3-10 Democrats today and they elected let's say Representative Thom Hartmann, as Speaker of the House or Majority Leader, the legislation that would've come to the House floor, would've looked a lot different, than what we got from the populist Tea Party run House of Representatives. But, again, elections have consequences. House Democrats were blown out of the House in 2010 and lost 62 seats. So, we got a Tea Party run House instead. 

The Huffington Post: Steven Hill: 'Don't Cut Social Security, Double It'

Source:The Huffington Post columnist Steven Hill.

"Doubling Social Security's individual payout would cost about $650 billion annually for the 51 million Americans who receive benefits. Here are some commonsense ways to pay for it. 

With Congressional elections around the corner, Social Security has become part of the anti-big government mantra of Tea Party candidates. So far, the "debate" over Social Security has been between those deficit busters who say it must be cut to reduce government debt, and others who want to maintain it as is.

But the New America Foundation recently released a study (that I authored) that concludes that neither position grapples with the reality of the utter breakdown of America's retirement system that is occurring. A completely new approach is needed, and the study proposes an increase in the Social Security payout to every American as a way of modernizing the U.S. economy and helping American businesses to become more competitive.

Here's the dilemma that the U.S. faces. Since WWII, retirement has been conceived as a "three-legged stool," with the three legs being Social Security, pensions, and personal savings centered around homeownership. But today most private sector employers have quit providing pensions, and state and local government's public pensions are drastically underfunded.

In addition, a collapsed housing and stock market, combined with increased inequality even before the Great Recession, have drastically reduced Americans' personal savings. In short, the "retirement stool" no longer is stable and secure, and suddenly Social Security, which always has been viewed as a supplement to private savings, is the only leg left for hundreds of millions of Americans.

Studies show that people in the bottom two income quartiles depend on Social Security for 84 percent of their retirement income, and even the second richest quartile depends on Social Security for 55 percent of its retirement income. Only the richest 25% of Americans don't rely heavily on Social Security.

But the real problem with Social Security is not, as its critics say, that it is underfunded. Contrary to gloomy predictions the program is on solid financial footing, with the Congressional Budget Office projecting that Social Security can pay all scheduled benefits out of its own tax revenue stream through at least 2037.

The bigger problem is that Social Security's payout is so meager, which is problematic since it has been thrust into this new role as a de facto national retirement plan. Currently it replaces only about 33 to 40 percent of a worker's average wage from the year prior to retirement (compared to Germany and France where it replaces 70 and 75 percent respectively). That is simply not enough money to live on when it is your primary -- perhaps your only -- source of retirement income.

Doubling Social Security's individual payout would cost about $650 billion annually for the 51 million Americans who receive benefits. Here are some ways to pay for it.

First, lift Social Security's payroll cap that favors the wealthy. Currently Social Security only taxes wages up to $106,800 a year, and any income earned above that is not taxed. The net result is that poor, middle class, and even moderately upper middle class Americans are taxed 12.4 percent (split between employee and employer) on 100 percent of their income, but the wealthy pay a much lower percentage. A lawyer making $500,000 a year effectively pays only 2.5 percent, and millionaire bankers pay a paltry 1.2 percent.

Removing the income cap and making all income levels pay the same percentage - which is how Medicare works -- is a very popular reform. Polls show that most Americans think that if they pay Social Security tax on their full salary, others should too. Taxing all income brackets equally would raise about $377 billion, which is nearly sixty percent of the revenue needed to double the Social Security payout.

Second, with all Americans receiving Social Security Plus, employer-based pensions would be redundant so businesses no longer would need the substantial federal deductions they currently receive for providing employees' retirement plans. These deductions total a whopping $126 billion annually.

Those two alone would provide three-fourths of the revenue needed to double Social Security's payout.

Other possible revenue streams exist, such as reducing or eliminating other unfair deductions in the tax code which currently allow the top 20 percent of income earners to reap generous deductions that most low and moderate income Americans cannot enjoy. These include deductions for private retirement savings, homeownership, health care and education.

For example, only those individuals who have enough income to divert for savings or investment have the luxury of enjoying considerable tax deductions for their 401(k)s, IRAs and pensions. Similarly the homeownership deduction for mortgage interest only benefits people with sufficient income to buy a home. But the poor and working class rarely can take advantage of these since they don't make enough to itemize deductions.

While a certain number of moderate income Americans benefit from these, if we enacted Social Security Plus they would no longer need to rely on these deductions as vehicles for retirement savings. Instead of buying a home as part of their retirement plan -- which as we have seen is a risky investment -- they could put their money into Social Security Plus. In 2010 the mortgage interest deduction alone will amount to about $108 billion.

We also could devote an estate or inheritance tax to the Social Security trust fund for anyone with an estate of $3.5 million or more; we could make capital gains and unearned income subject to a Social Security contribution; or direct a small transaction fee levied on all stock market transactions into the Social Security trust fund. Still another possibility would be to use a flexible payroll tax, as Finland has done, in which payroll taxes are increased when the economy is going well and reduced when the country is hit by hard times. This counter-cyclical intervention acts as an automatic stabilizer to reduce the cost to employers of hiring workers during tough times, and during good times creating a buffer fund that would help finance an expansion of Social Security.

In short, numerous tax policy options exist to fund this, and any of them could be implemented in stages, targeting first those who are most in need. We also could allow active seniors who have not yet reached full retirement age to take a half-pension and work at half-time without losing their right to a full pension upon their retirement.

An expansion of Social Security -- one of the most successful, stable and popular social programs in American history, currently celebrating its 75th year -- not only would be good for America's retirees, it also would be good for the broader macro-economy. It would act as an "automatic stabilizer" during economic downturns, keeping money in retirees' pockets and stimulating consumer demand. Most economists agree that low and middle income people are more likely to spend an extra dollar on goods and services than are affluent individuals, because they put much less money aside.

Social Security Plus also would help American businesses trying to compete with foreign companies that don't have to provide pensions to their employees, since those countries already have generous national retirement plans. Benefits would be portable when changing from one job to another, so working Americans wouldn't be segregated into unequal classes based on whether their employer offers a pension. Every worker could contribute to her or his own retirement pension which would be directed into a Social Security Plus system with investments restricted to Treasuries, instead of handing it over to mutual or pension fund managers who gamble on the volatile stock market with future retirees' money (especially since there is no evidence that the typical fund manager can consistently beat the average return on Treasuries).

Social Security Plus' greater retirement security also would decrease health care costs stemming from having insufficient income to receive timely care for seniors. And it would be broadly fair, since even those higher income Americans who are having some of their tax deductions reduced would see part of it returned to them in the form of a greater Social Security payout.

In short, Social Security Plus would provide a stable, secure retirement for every American and contribute greatly toward a solid foundation from which to build a strong and vibrant 21st century U.S. economy." 

From The Huffington Post

MLord & God: 'Did Anti-War Activist & Lifelong Democrat Tom Hayden Send Generation a Huge Message?'

Source:MLord & God- Tom Hayden & Jane Fonda.

Source:The Daily Journal 

"Did Anti-War Activist & Lifelong Democrat Tom Hayden Send Generation a Huge Message?" Originally from MLord and God, but the video has since been deleted or blocked on YouTube.

The Left, which is a diverse movement of progressives (who are Center-Left) and Socialist-Leftists (who are Far-Left) in America, have been around a long time. And the Progressives emerged in the Progressive Era in the early 20th Century with their economic agenda that eventually became the New Deal in the 1930s. President Truman’s proposed Fair Deal that was to build on the New Deal, that never became law in the 1940s and then of course the Great Society of the 1960s.

Economic Progressives have been vocal and vibrant for really a hundred years now. But Socialists really didn’t emerge until the 1960s as far as being a vibrant political movement in America, with the emergence of the New-Left in the late 1960s. It is really the 1960s when the Baby Boom Generation came of age that Socialists made their feelings known across the country on issues like civil rights. But we had a real anti-war movement then and a women’s movement, environmental movement as well as the homosexual movement. So homosexuals would be treated equally under law.

There are plenty of things that I like about the 1960s as a Liberal. The Hippie movement to me was really about individual freedom. Young Americans tired of being conformed to having to live one type of life. That Americans in previous generations lived and didn’t fit into the American life that their parents and grandparents. And so-forth lived under and decided to rebel and tell the establishment: “That we are not looking to overthrow you. And we are not dangerous, but we simply want the freedom to live our own lives.” Thats what the mainstream Hippie movement was. 

And I like the civil rights movement of course and what came from that. But there was this fringe in the Hippie movement that was almost anarchist (if not anarchist) that was not only anti-war and anti-Vietnam was and I would’ve been against the Vietnam War was if I was alive and an adult back then. 

But the problem I have with the anti-war movement was that it wasn’t just anti-war, but anti-military all together. And treating soldiers, sailors, Marines, sailors like they were evil murderers or something which they weren’t, they were all American Patriots instead.

The Left at its best and the mainstream faction of it the Progressives who  represent the best of what Leftists and leftism have to offer America. This idea of Liberal Democracy, individual freedom and self-determination. A system where all Americans would benefit from and where we would all as a country have the freedom to chart our own course in life. And make out of it what we put into it. 

But like the Right, we also have a fringe from Socialists when it comes to economic policy and people who are called non-interventionists. Who only use violence to confront people they don’t like when they are doing something they don’t like. Like war to use as an example that give all Leftists a bad name.

AlterNet: Michael Moore: 'Three Reasons America Is Falling Apart And How We Can Save Ourselves'

Source:Michael Moore- at least Mike loves baseball. So there is something good about him.

"After watching the deranged, delusional National Rifle Association press conference on Friday, it was clear that the Mayan prophecy had come true. Except the only world that was ending was the NRA's. Their bullying power to set gun policy in this country is over. The nation is repulsed by the massacre in Connecticut, and the signs are everywhere:a basketball coach at a post-game press conference; the Republican Joe Scarborough; a pawn shop owner in Florida; a gun buy-back program in New Jersey; a singing contest show on TV, and the conservative gun-owning judge who sentenced Jared Loughner.

So here's my little bit of holiday cheer for you: These gun massacres aren't going to end any time soon.

I'm sorry to say this. But deep down we both know it's true. That doesn't mean we shouldn't keep pushing forward -- after all, the momentum is on our side. I know all of us -- including me -- would love to see the president and Congress enact stronger gun laws. We need a ban on automatic AND semiautomatic weapons and magazine clips that hold more than 7 bullets. We need better background checks and more mental health services. We need to regulate the ammo, too.

But, friends, I would like to propose that while all of the above will certainly reduce gun deaths (ask Mayor Bloomberg -- it is virtually impossible to buy a handgun in New York City and the result is the number of murders per year has gone from 2,200 to under 400), it won't really bring about an end to these mass slayings and it will not address the core problem we have. Connecticut had one of the strongest gun laws in the country. That did nothing to prevent the murders of 20 small children on December 14th.

Source:AlterNet

"This short cartoon for Michael Moore's Bowling For Columbine was

Described as, "Worth the price of admission" by Variety Magazine, "a joyously funny cartoon sequence" by The Hollywood Reporter and by Oprah as her favorite part of the film when she aired it on her show, FlickerLab's Creative Director, Harold Moss, directed, and lent his voice for all the characters in this animated segment of Michael Moore's film, Bowling for Columbine." 

Source:Flicker Lab- from Michael Moore. You can't blame it on anyone else.

From Flicker Lab

ABC Evening News: ‘March 1972, Campaign News’

Source:ABC News longtime anchor Howard K. Smith.

Source:The Daily Journal

“In this rare clip, One of Nixon’s primary challengers drop out, the Republican accuse AT&T of not making the Democrats pay phone bills, African Americans have their own convention Jesse Jackson makes an apprentice, also news on Northern Ireland.” 

From E-Fan

One way to sum up the 1972 Democratic presidential primaries, is to say it went to the guy who was damaged the least and not to the best candidate. Because there was really never any real danger to President Nixon losing reelection. But about how big of victory he would get and what he would do with it.

The Democratic race for president between Senator’s George McGovern, Ed Muskie, Hubert Humphrey and others, was great TV and very interesting. And a very good look inside of the Democratic Party was between its establishment Center-Left, that Senator Muskie and Senator Humphrey represented and the more social democratic New-Left that Senator McGovern represented in 1972.

The story about the Black Panthers (a New-Left socialist and communist group interested in the state of the African-American community) was interesting. They were in and outside of the Democratic Party back then and much further left of the NAACP which is more of a progressive Center-Left civil rights organization who are definitely tied to the Democratic Party as their supporters are.

The word militant is perfect for the Black Panthers, because that is what they were. And at the very least were linked and associated with known terrorists and criminals. And were accused of being part of terrorists acts in the 1970s. They were looking for a much more radical direction for the African-American community than the NAACP.

Apparently big business’s and other special interests on the Democratic Party and Republican Party was also a big issue in 1972. Of course it was which is why I still don’t know why Congress has never passed a full-disclosure law on all federal candidates and incumbents. Actually I do, because neither Democrats, or Republicans want to disclose who contributes to their campaigns. Because a lot of those contributors are controversial and Democrats and Republicans don’t want to officially be associated with groups like that. But that along with ending gerrymandering completely is the only way you weed out corruption in American politics. Because of how liberal our First Amendment is. 

CBPP: James Honey: Protecting Public Assistance in Deficit Reduction

Source:Center On Budget & Policy Priorities fellow James Honey.

"At some point, the President and Congress will likely agree on a deficit package that includes both up-front savings and a target for more savings that they would achieve in 2013 by changing tax and spending policies.

The package also will likely include a backstop mechanism that’s designed to ensure that the 2013 savings come to fruition even if the President and Congress fail to agree on those policy changes.

In designing that mechanism (e.g., automatic across-the-board spending cuts), policymakers will face a decision that’s received little attention of late — whether to continue a quarter-century tradition of protecting low-income programs or to break faith with that tradition and risk serious harm to the poorest and most vulnerable Americans.

Ever since the 1985 Gramm-Rudman-Hollings (GRH) law, with its annual deficit targets and its across-the-board spending cuts (or “sequestration”) to enforce them, policymakers have exempted low-income mandatory (or entitlement) programs whenever they’ve included backstop mechanisms of that kind in deficit-reduction packages.  That tradition includes both versions of GRH (1985 and 1987), the pay-as-you-go laws of 1990 and 2009, and the sequestration mechanism of last year’s Budget Control Act.  Most of these laws were enacted on a bipartisan basis.

Were policymakers to ignore this tradition, at risk would be such key safety net programs for the nation’s most vulnerable families and individuals as Medicaid, the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program), Temporary Assistance for Needy Families, Supplemental Security Income for poor seniors and people with disabilities, child care assistance, free and reduced-price school meals for low-income children, and the Children’s Health Insurance Program.

Subjecting these programs to a backstop mechanism would impose enormous hardship on people already living on the margins, far below the poverty line, and it would likely result in increases in homelessness, hunger, and the number of people who can't access needed health care.  The effects on poor young children could be long-lasting.

The crafting of a backstop mechanism, and what’s in it, is part of a larger question: who should bear the burden of deficit reduction?

In the plan by its co-chairs, former White House Chief of Staff Erskine Bowles and former Senator Alan Simpson, the President’s fiscal commission concluded that any deficit reduction plan should “protect the truly disadvantaged.”  Similarly, a blue-ribbon private commission chaired by former Office of Management and Budget Director Alice Rivlin and former Senate Budget Committee Chairman Pete Domenici proposed a plan that avoided cuts in low-income mandatory programs other than Medicaid.  The plan produced in July 2011 by the Senate’s bipartisan Gang of Six did the same.

Those who believe that deficit reduction should not increase poverty, inequality, the ranks of the uninsured, or other hardships for our most vulnerable citizens should honor the Bowles-Simpson principle to that effect.  Policymakers should not overturn more than 25 years of precedent, and instead should maintain the historic exemption for low-income entitlement programs from automatic cuts under a backstop mechanism." 

From the Center On Budget & Policy Priorities

I agree with James Honey that we shouldn't gut programs for low-income Americans, especially when economic times are tough (like right now) simply for deficit reduction. But the idea that there are no savings in any of these programs that can be achieved, that could be used for deficit reduction, is at best far-fetched and worst, simply partisan. 

You lower poverty and unemployment in America, you would automatically reduce the deficit, because you would have fewer Americans on public assistance. The way to do that, while at the same time putting people to work and back in school, is to have work and educational requirements, that could come with childcare assistance, for everyone whose not eligible to retire yet and physically and mentally able to work full-time, to go to work and back to school, while retaining their public assistance benefits, as they're working their way off of those programs, with work and education.