The National Low Income Housing Coalition (NLIHC) reported this week that last week, hopes for an agreement between Democrats and Republicans on averting the fiscal cliff first dwindled, and then rekindled.
Republicans began the week opposing the President’s plan to address the end-of-year fiscal challenges and later indicated room for negotiation on a deal to keep the country from going off the fiscal cliff.
If sequestration is allowed to take effect on January 2, 2013, affordable housing programs at HUD and the USDA Rural Housing Service would be cut by 8.2%.
The term fiscal cliff encapsulates the potential economic decline the nation could face if a solution is not found to the end-of-year expiration of the Bush-era tax cuts, the start of sequestration in 2013 and the simultaneous expiration of other tax provisions and benefits at the end of 2012. The Budget Control Act of 2011 (BCA) requires the sequestration of discretionary funds for 10 years starting in FY13, which means making across-the-board cuts, to achieve a $1.2 trillion reduction in the deficit over a 10-year period.
On November 30, 2012, President Barack Obama released his two-part plan to avert sequestration, address end of the year tax extensions, and close the remaining $3 trillion deficit gap addressed by the BCA.
The President proposes to reach an additional $3 trillion in deficit reduction, on top of the $1 trillion already enacted through the BCA’s discretionary spending caps, through two stages of spending and revenue changes.
Republicans immediately objected to the plan and then released their own plan, which would make additional cuts to discretionary spending, cut mandatory spending, cut health care savings and draw revenue from comprehensive tax reform. The plan would not change tax rates. Republicans’ most vehement objections to President Obama’s plan focused initially on its increase of tax rates for the top 2% of income earners, its increase of the debt limit and the multi-year stimulus package in stage one.
Later in the week, House Speaker John Boehner (R-OH) indicated that he might compromise on his position of the tax rates. Leaders in both parties closed the week saying that lines of communications were open.