The predominant themes for the July 19 United Way Worldwide Day on the Hill were sequestration (automatic, across the board spending reductions outlined in the Budget Control Act of 2011) and the charitable deduction cap.  Carol Wood, Public Policy Director and Kathy Surace Smith, United Way Board member, met with 5 members of our Washington delegation (Representatives’ Reichert, Smith, and McDermott and Senators’ Cantwell and Murray) and/or their staff to discuss the effects of sequestration on human services and request that the charitable deduction cap not be reduced or eliminated .  In addition to these two topics, United Way discussed the importance of reauthorizing the Farm bill to continue support for SNAP (food stamps) and child nutrition programs as well as the need to continue support for the HEARTH Act and McKinney Vento programs.  United Way Worldwide had written to Congressional leadership asking them to find a way to protect human service programs that benefit all communities as they revisit sequestration.  The letter was signed by over 150 United Ways throughout the country including United Way of King County.

Sequestration plus the expiration of the Bush tax cuts at the end of 2012 are what people on and off the Hill are referring to as the “fiscal cliff”.  This confluence of circumstances has Congress discussing changes to tax policy as well as ways to circumnavigate sequestration.  A recently passed House bill would have replaced sequestration with a package taking deeper cuts to human services to support increases in defense spending.  While the effects of sequestration on defense have been widely publicized, the effects on discretionary, non-defense programs have not received the same attention.  Sen. Patty Murray introduced an amendment alongside one offered by Sen. John McCain that would require the Office of Management and Budget to submit a detailed report to Congress on effects of defense and non-defense discretionary budget sequestration for fiscal year 2013.

When sequestration goes into effect in January 2013, there will be automatic cuts (between 7-9%) on  human service discretionary programs; entitlement programs like Medicaid are exempt from the sequester.  The sequester is expected to cut more than $3 billion from the Department of Education, and result in a $35 billion decline  in funding for housing and urban development programs.  Other programs subject to sequestration include the Emergency Food and Shelter program, affordable housing, child care and development block grant, Earned Income Tax Credit, community health centers, TANF and the Low Income Home Energy Assistance program.

Everyone agrees that Congress will revisit sequestration after the November elections but before the end of the year. It is just not clear what that revisit will look like.  Some likely scenarios include: adopting a comprehensive package including changes to tax policy, making a more modest mitigation to sequestration or delaying sequestration with or without some additional revenue.

In the meantime, September 30 is the end of the federal fiscal year, so to keep the federal government running Congress will either need to pass a budget for the new fiscal year or do a Continuing Resolution for the budget and for some expiring programs like the Farm Bill.  Currently, with the House and Senate far apart on their level of support for the Farm bill and conservatives wanting deeper cuts and more reform, there is only a slim chance that it would be voted on before the August recess.