Many programs important to low-income people are exempt, but virtually all programs under the Department of Housing and Urban Development (HUD) are not exempt and would have been cut by sequestration. The Alliance predicted that sequestration’s cuts to HUD homelessness programs would have meant homelessness instead of housing for 145,000 people. And it still might.
Unlike many of the spending cuts or tax measures, which provisions in the new bill either extended for a year or made permanent, sequestration was delayed for only two months, until early March. The exact details on the impact at that point are not yet known.
The bill allows the “payroll tax holiday” to end, which means that working people will see their Federal Insurance Contributions Act (FICA) withholding taxes increase from the 4% level of their income, instituted by the Recovery and Reinvestment Act of 2009, to the previous 6% level, effective immediately.
The bill extends the Emergency Unemployment Insurance benefits for another year. Without this deal, around 2 million people who are experiencing long-term unemployment would have lost unemployment benefits.
The bill extends temporary tax credits that benefit low-income people for a year. These tax credits, which include the Child Tax Credit, certain favorable provisions of the Earned Income Tax Credit, and others, were scheduled to expire.
The bill extends for one year the Medicare “doc fix,” which provides higher reimbursement rates for physicians under the Medicare program.
And of course the bill allows the nation to avoid (for now) some of the negative effects the fiscal cliff would have had on the economy and unemployment levels.
As far as next steps,
Sometime around the beginning of March, the federal government’s debt will again approach the debt limit that Congress has passed into law. Many members of Congress have said that they will vote for a measure to increase the debt limit only if the measure also cuts spending; and
Also scheduled for March are the across-the-board “sequestration” cuts and the expiration of the temporary FY 2013 appropriations continuing resolution. All this will set the stage for another last-minute scramble, with some in Congress sure to push for big spending cuts that will put at risk the well-being of millions of the poorest and most vulnerable Americans.