Jewish Federations React to Super Committee Failure

Last night at midnight the so-called Congressional Super Committee (the Congressional Joint Select Committee on Deficit Reduction) was required to send its recommendations to the Congressional Budget Office for formal scoring or cost analysis. This would have been in advance of the Committee's November 23 statutory deadline to vote on a final package of proposals that would significantly cut the budget. Governed by the provisions of the Budget Control Act which passed Congress last August, a majority of the 12 members of the Super Committee needed to agree to at least $1.2 trillion in federal budget reductions over the next nine years. Unfortunately, the Super Committee failed to meet its deadline!

In response, Jewish Federation of North America, our parent organization, released the following statement:

While we are saddened that the Super Committee did not reach a consensus to solve our nation's long-term fiscal health, we are relieved that the tax deductibility of charitable contributions remains intact. During this time of economic crisis when services provided by charities are more and more needed, government policy should encourage charitable giving, not place stumbling blocks in our way. Certainly this harmful proposal will see the light of day again, and with certitude, we will defeat it again. We are also pleased that in the absence of an agreement, Medicaid funds that serve the neediest in our communities have been fully protected.

We are gravely concerned about the consequences of automatic budget cuts that will slash government spending - particularly as they relate to programs that provide needed care to vulnerable populations. We will dedicate our efforts in 2012 to finding a bipartisan compromise that will prevent these draconian cuts from taking place on January 1, 2013.

Realizing that the Super Committee would be unable to reach agreement, its Co-Chairs, Representative Jeb Hensarling (R-TX) and Senator Patty Murray (D-WA), released the following statement yesterday: "After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the Committee's deadline. Despite our inability to bridge the Committee's significant differences, we end this process united in our belief that the nation's fiscal crisis must be addressed and that we cannot leave it for the next generation to solve. We remain hopeful that Congress can build on this Committee's work and can find a way to tackle this issue in a way that works for the American people and our economy."

Now, according to the provisions of the Budget Control Act, sequestrations (automatic cuts) are scheduled to begin taking effect on January 1, 2013. Of course, New Years day 2013 is more than a year from now, national elections will occur in the interim, and much could change between now and then. In theory, these cuts will go into effect unless a majority of the members of each chamber of Congress passes an alternative plan and the President signs that plan before January 1, 2013. President Obama will still be in office during this time period and his thoughts will be a key factor regardless of whether he wins or loses his bid for re-election. Yesterday the President said that while he was still prepared to reach a compromise with Republicans, he would not allow them to circumvent the automatic trigger and would veto any such proposals. "I will veto any effort to get rid of automatic spending cuts.... There will be no easy off ramps on this one."

Assuming that sequestrations take effect in 2013, they would include:

• $454 billion in reductions to defense spending;
• Deficit Reduction must be based on the principle that any solution to the debt crisis requires shared sacrifice and should be balanced while positively influencing economic growth, helping to reduce the budget deficit, and creating jobs.
• $294 billion in reductions to non-defense discretionary spending (including all domestic spending, homeland security and foreign aid, among other categories);
• $31 billion in reductions to Medicare Part B;
• $123 billion in other Medicare reductions to providers and insurance plans, up to 2% of total payments to them; and
• $47 billion in reductions to other forms of entitlement spending the largest of which is farm price supports. Some mandatory programs including Medicaid, Social Security and food stamps are specifically exempt from the sequestrations.

Along with reduced payments for interest on the federal debt, these cuts total approximately $1.1 trillion.

If the sequestration takes effect, non-defense discretionary spending accounts would be cut by $21 billion during the first 3/4 of calendar year 2013. There would be additional cuts to these accounts of $32 - $36 billion for each of the next eight fiscal years through 2021, representing 5.5% - 7.8% of the value of these accounts depending on the year. There is a certain amount of ambiguity in how these reductions would be distributed, but it appears that for fiscal year 2013, the non-defense cuts would occur through across-the-board, proportional reductions in new funding for each discretionary program in the appropriations bills for that fiscal year which began on October 1, 2012. For FY 2014 – 2-21, the cuts would occur through reductions in the statutory caps on total funding with the Appropriations Committees having the authority to decide how to allocate to specific programs within those newly reduced caps.

During the past three months, The Jewish Federations of North America have focused on the following principles while directing advocacy towards the Super Committee:

• Reductions in discretionary spending should be taken in approximately proportional amounts from both the domestic and national security/defense sectors. Spending cuts should not unfairly target the most vulnerable among us, whose lifelines are dependent on such critical assistance programs as the Community Services Block Grant, the Emergency Food and Shelter Program, the Older Americans Act, the Social Service Block Grant, Sections 202 and 811 housing, and the Community Development Block Grant.
• Medicaid must not be turned into a block grant or a capped program. Instead, any necessary reductions to Medicaid and Medicare should stem from efficiencies that improve service while reducing costs (e.g. care coordination for chronic conditions, greater utilization of health information technology, and increased incentives to provide home and community-based services) as well as targeted efforts to eradicate fraud, waste, and abuse.
• Any reform of the tax code should not reduce the charitable tax deduction and other giving incentives so America's charities can continue to provide critical social services in the midst of this recession.
• Any modification to Social Security should ensure the long-term solvency of the program.

While it is disappointing that the Super Committee was not able to come to an agreement on how best to solve our nation's problems associated with the federal debt, clearly a damaging set of recommendations from the perspective of the federation system is worse than no plan at all. We do not yet know exactly how sequestration will affect the programs we most care about, but sequestration would not harm the charitable tax incentive, Medicaid or Social Security. Accordingly, the federation system will spend the next year engaging in effective advocacy on behalf of our specific programmatic priorities to ensure that if sequestration takes place, it will not disproportionately hurt the programs we care most about.