Understanding “Sequestration”

Last year, Congress and the President worked together to pass the Budget Control Act of 2011 (BCA) to address immediate and long-term fiscal concerns for our nation. (Read Generations United’s full statement on the BCA.) Because Congress couldn’t agree on how to cut the federal budget, automatic across the board cuts – known as sequestration - will kick in in January 2013.

These automatic cuts will be applied in a 50-50 split between defense and non-defense spending. This represents $54.7 billion in domestic spending which will be cut from a wide range of programs, including programs that are vital to children, youth and older adults.

Sequestration will affect both mandatory and discretionary domestic funding sources. Mandatory cuts will include:

• Cuts in Medicare payments to providers and insurance plans; those cuts are limited to 2 percent of such payments in any year, or $11 billion in 2013.  This means that Medicare providers will continue to bill Medicare in the normal way but will be reimbursed at a rate of 98 cents on the dollar.
• About $5.2 billion in cuts in the other mandatory programs, the biggest of which supports farm prices; other affected programs include student loans, vocational rehabilitation, mineral leasing payments, the Social Services Block Grant, and dozens of smaller programs.

Other domestic programs, which are funded through discretionary spending, would face even more drastic cuts of $35.5 billion – or 8.4%. The bulk of the cuts to domestic spending would be to important programs for children, youth and older adults. These include Head Start and K-12 education funding, the Low Income Home Energy Assistance Program (LIHEAP), employment and nutrition programs for older adults, and funding to implement the Affordable Care Act.

(For a listing of projected cuts, see the Coalition on Human Needs’ report Self-Inflicted Wounds: Protecting Families and Our Economy from Bad Budget Choices.)

Congress is currently discussing ways to avoid sequestration, but some proposals would protect defense spending at the expense of even deeper cuts to domestic programs, or even those exempted from cuts under the BCA (such as, Medicare, SNAP, and Temporary Assistance for Needy Families (TANF)).

Generations United urges Congress and the President to protect our nation’s most vulnerable and invest in our country’s future by supporting proposals which would provide adequate revenue to address the needs of our citizens.

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Generations United Responds to Obama’s FY2013 Budget Request

Looking to “build an economy to last,” President Obama has released his proposed budget for FY 2013. Many of its provisions won’t come as a surprise: the President began laying the groundwork for his budget with his economic speech in Kansas in December and again during the State of the Union Address in January. The budget simply serves as the plan to put his aspirations into action.

After a preliminary review, Generations United’s Policy Team by and large gives the budget a thumbs up, cautioning that it does contain some cuts to social service programs. Here’s a brief summary of the major provisions that affect children, youth and older adults.

• The President’s budget provided important increases in Early Education Investments and Community Supports through increased funding for Head Start and Early Head Start and for an early learning challenge focus within the Race to the Top program. Generations United supports the continued integration of early childhood programs and the increased investment in these programs.
• The budget continues to fund our nation’s Commitment to Programs Serving Vulnerable Populations through important programs such as Woman, Infants, and Children (WIC) and the Supplemental Nutrition Assistance Program (SNAP). Unfortunately the Low Income Home Energy Assistance Program (LIHEAP) was not given sufficient priority in a time of rising home energy costs and stressed family budgets.
• The budget takes important steps toward College Affordability and Tax Relief efforts by increasing the maximum Pell Grant award and making expansions of several tax credits permanent.
• The budget proposes a modest increase to continue the Support for Volunteerism, for important programs like Senior Corps, that does great work engaging seniors to serve children and at-risk youth in our communities.
• The FY13 budget provides funding to continue the implementation of the Affordable Care Act (ACA), which provides critical health care coverage and support for our youngest and oldest generations.
• The President’s 2013 budget also includes a commitment to strengthen Social Security. Generations United urges the Administration to continue their commitment to this issue and pledge not to cut Social Security.

Generations United will continue to work with Members of Congress and the Administration on improving/supporting these and other critical programs for children and older adults in order to strengthen our country and support an economy built to last. 

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