Budget Control Act requires cuts or triggers automatic cuts
Tight timeline between now and end of 2011 No time for problem
framing, debate or public input Little time for most of Congress to
provide meaningful input
Slide 4
4 Averted US Federal debt default on $14 trillion debt 1 Aug 11
$2.1 trillion in cuts over 10 yrs (CBO est.) President can raise
debt ceiling $2.1-2.4 tril. until 2013 The cuts $917 billion w/caps
on discretionary spending back-end loaded $741 b. outlay cuts ($21
b. in 2012 growing to $112 b. in 2021 decided by Appropriations
Committees) $156 b. interest costs on debt $20 b. education loan
cuts, reducing fraud/waste/abuse, etc. $1.2 trillion minimum in
deficit reduction by super committee of 12 3 Sen. Ds, 3 Sen. Rs, 3
House Ds, 3 House Rs Trigger incentiveAutomatic cuts across board
if no deal
Slide 5
Senate Dems Patty Murray (WA)co-chair John Kerry (MA) Max
Baucus (MT) Senate Repubs John Kyl (AZ) Rob Portman (OH) Pat Toomey
(PA) House Repubs Jeb Hensarling (TX)co-chair Dave Camp (MI) Fred
Upton (MI) House Dems James Clyburn (SC) Xavier Becerra (CA) Chris
Van Hollen (MD) Photo: Co;urtesy AP from Washington Post, 11 Aug
11; http://www.washingtonpost.com/
Slide 6
14 Octdeadline for regular committees to submit recommendations
7-10 NovHouse recess 11 NovHouse & Senate recess 21 Nov (or
earlier)CBO scores to supercommittee 21-28 NovHouse recess 23
Novsupercommittee reports package of cuts 9-30 DecHouse recess 23
Decdeadline for Congress to vote on cuts 24 Dec: Congressional
recess 2 Jandeadline for enactment of minimum cuts; 3 Janif no
minimum cuts, automatic cuts kick in to start 15 Jan 2013, (SNAP,
CRP, social programs off the table)
Slide 7
Congressional committees may recommend cuts to any program
& revenue increases/reforms Supercommittee may recommend:
Discretionary program cuts Entitlement program cuts Revenue
increases Revenue reform Automatic cuts: 50/50 between defense
& non- defense Key mandatory safety net programs exempt;
includes Medicaid, Social Security, SNAP, CRP, CCDBG, TANF, EITC,
CTC Medicare cuts capped & limited to providers
Slide 8
8 Current programs likely unaffected in short term Second round
will cut spending at levels tbd On the chopping blockperhaps $30
billion over 10 yrs Direct payments Conservation programs SNAP
Ethanol subsidies Crop insurance Whatever the decision,
participating producers can expect less from Federal programs in
future years
Slide 9
9 Farm prices are up for now Recall what determines the level
of general economic health: Consumer Spending (currently down)
Business Investment (currently sluggish) Government Spending
(currently down, esp. state/local) US and global markets suggest
consumers and business are jittery and pulling back, but cheap $
will slow loss More cuts in federal spending likely Signals suggest
demand for food/fiber will be down (at least globally) and prices
will decline in next 12-24 months The result: risk management
essential to survival & profits
Supercmte cant agree on a baseline, & this relates to how
to count the Bush tax cuts & their possible demise. 17 Oct:
jointly-signed letter to supercommittee from
Stabenow/Roberts/Lucas/Peterson for $23 bil. in cuts to farm bill
spending
Slide 12
12 S&P rating downgrade increases importance of managing
federal debt situation Many Congressional reps will find it
difficult to resist political expedience with 2012 election cycle
Dems will have less incentive to compromise on deliberated cuts in
second round if no tax reform/revenue in the deal Repubs will have
less incentive to compromise on cuts if their base thinks Obama
will be blamed Obamas veto power unlikely to be overturned if that
scenario plays out, suggesting no balanced budget deal, no
substantive cuts in Social Security, no extension of Bush tax
cuts
Slide 13
WTOWTO NAFTANAFTA *NOTE: If fish & forest product added to
ag, trade balance would be $15.2 b. for fy10. FAIR96FAIR96
FSRIA02FSRIA02 $108.66 b. Exp. $78.95 b. Imp. $29.71 b. surplus
FCEA08FCEA08
Slide 14
14 $ Billion FSRIA 2002 $103.6 b. $10.2 b. $93.4 b. FCEA 2008
FAIR 1996
Slide 15
Slide 16
16 Debate on severity of debt not inconsequential, but
generally overlooks the impact of growing economy domestically and
globally 1990s Clinton deal w/Repub Congress successful in ending
deficit and beginning to pay down debt The importance of Compromise
in success and stability of Democracy cannot be over-stated Voters
may decide that there are other values more important than
Democracy, but that decision needs to be made consciously and
deliberately
Slide 17
The thing about democracy, beloveds, is that it is not neat,
orderly, or quiet. It requires a certain relish for confusion.
--Molly Ivins
Slide 18
Uncertainty and fear about weak market & jobs Wealth base
hasnt recovered Long-term growth trend lowered Credit
tightened
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