Budget for FY11 and debt ceiling set stage for epic fight
The 112th Congress holds its first session at noon on January 5, 2010, it is clear that the House of Representatives will seek significant cuts in the FY11 Budget. The Senate and the House, during the lame duck session, approved a Continuing Resolution (CR) that extends fund most federal programs at FY10 levels through March 4, 2011. Now it appears that the resolution of the budget could coincide with a vote on raising the debt ceiling.
South Carolina Senator Lindsey Graham (R., S.C.) on Meet the Press on January 2, 2011, stated:
“I will not vote for the debt ceiling increase until I see a plan in place that will deal with our long-term debt obligations, starting with Social Security, a real bipartisan effort to make sure that Social Security stays solvent, adjusting the age, looking at means tests for benefits. On the spending side, I’m not going to vote for debt ceiling increase unless we go back to 2008 spending levels, cutting discretionary spending.”
The response from the administration was clear:
Austan D. Goolsbee, the chairman of the White House Council of Economic Advisers, said Sunday that hitting the debt’s $14.3 trillion ceiling without extending it would mean “essentially defaulting on our obligations, which is totally unprecedented in American history.”
Virginia Democrat Sen. Mark Warner and Georgia Republican Sen. Saxby Chambliss according NPR’s All Things Considered on Monday intend to introduce legislation this year to enact the deficit commission’s plan to reduce the deficit.
The deficit commission recommended significant cuts to spending — including Social Security and defense — as well as steps to increase tax revenues. Neither Warner nor Chambliss expects those recommendations to pass Congress as written. But they say lawmakers who object to any part of the plan should have to suggest an alternative.
The impact of cuts to the FY08 levles in HUD’s budget for New Jersey could exceed $100 million dollars a year based on the analysis we published last month.
The stakes are set for an epic fight over spending this year.
In a related update, last year’s Tax Relief Act failed to include funding for the National Housing Trust Fund and the Section 1602 low income housing tax credits (LIHTC) cash grant exchange program.
The National Housing Trust Fund would have generated $35,500,000 a year in capital funds for affordable housing.
The LIHTC which would have allowed state housing finance agencies to exchange a portion of their tax credit allocation for grant dollars to support local affordable housing. As a result of not having this funding source, it is anticipated that the 2011 LIHTC process will be the most competitive with funding available for only six projects.
If we are to succeed in ending homelessness and expanding supportive housing opportunities in New Jersey, it will require us to be unified and focused in our advocacy efforts. Anything less than that and we could suffer a devastating setback.