It is unlikely that anyone is happy with the Budget Control Act of 2011, but it is the budget agreement that we must now live with—and work to improve. Among other things, the bill raises the debt limit, avoids new revenues altogether, and relies solely on budget cuts to reduce the federal deficit.
Some analysts believe that these cuts are as likely to hurt our overall economy as they are the individual households they directly affect. However, there is more general agreement that the budget bill is better than the prospect of no resolution at all—something that could have triggered not only a default on our nation’s obligations, but also movement toward an eventual agreement that’s dramatically worse than the one just passed by Congress and signed by the President.
The Budget Control Act has four main provisions:
1. The bill raises the debt ceiling by between $2.1 trillion to $2.4 trillion, expected to cover Treasury’s borrowing needs until 2013.
2. The legislation will reduce deficits by at least $2.1 trillion, over a decade, starting next year. To do this, there will be cuts on discretionary spending.
3. The bill establishes a bipartisan joint committee of Congress that will have until November 23, 2011 to develop a deficit-reduction plan that must be voted on by December 23, 2011.
4. If Congress does not approve the committee’s debt reduction recommendations, as much as $1.2 trillion will be cut across-the-board, split evenly between defense and non-defense spending. Programs for those who live in poverty, including Medicaid and Social Security, would be exempted, but Medicare payments to providers could be hit.
New revenue is noticeably absent from the legislation. Tax breaks for the wealthiest people in the United States continue, and there are no new taxes to offset that substantial “loss” of revenue for the federal budget.
No one is happy, but the work goes on. There’s more analysis—and much more advocacy—to be done. For now, take a look at the statement released by the Coalition on Human Needs and the analysis offered by an article in the Washington Post. Then, stay tuned. We’ll keep you posted as further information emerges.