Shutdown ends, debt crisis averted – now what?

Nan Madden
Oct 25, 2013

The federal government shutdown has ended and the debt ceiling crisis averted, but serious concerns remain about whether Congress will take a path that supports economic growth and boosts Americans’ living standards, or instead will focus too much on deficit reduction and in the process, increase hardship and slow down the economic recovery.

The agreement reached last week by Congress and President Obama raises the debt ceiling until February 7, 2014 and funds the government at current levels through January 15, 2014, keeping in place the harmful across-the-board cuts known as the sequester, and leaving many questions on the table about how to fund the government in the coming years.

Those decisions will go before a budget conference committee that is tasked with wrapping up negotiations by December 13.

Whether the budget conference committee tries to craft a “Grand Bargain” or focuses more on the short-term fiscal challenges – especially replacing the harmful sequester with other deficit reduction, what is needed are budget choices that meet four criteria:

  • Strengthening the economic recovery, which is not creating enough good jobs.
  • Avoiding increasing poverty and hardship.
  • Investing in the building blocks of economic growth including infrastructure, education, research and expanded economic opportunity.
  • Taking a balanced approach that includes budget cuts and revenue increases.

Budget choices that meet these criteria would be a welcome change from our current situation. Sequestration is taking its toll. At a time when getting the economy back on track should be Job 1, these poorly timed cuts put a damper on the economy and job growth, and harm important public services. The budget conference committee has the opportunity to replace the sequester with a more carefully crafted set of budget choices, including additional revenues. This is critical since the overwhelming majority (80 percent) of deficit reduction enacted since 2010 has come from spending cuts, including the sequester cuts.

But there are potential dangers ahead as well. Some may seek to replace the sequester cuts with even more harmful cuts, including larger cuts to services that provide economic security to low- and middle-income Americans. Too much attention to deficit reduction in the near term is a real threat to economic growth and the well-being of Americans.

In this context, we continue to have concerns about the dramatic cuts to the Supplemental Nutrition Assistance Program (SNAP) that passed the U.S. House in September. If enacted, the House provisions would eliminate basic food assistance for millions of Americans – including at least 41,000 Minnesotans. Many of those who would lose assistance would be penalized for being unemployed at a time when jobs are very hard to find.

Any cuts would come on top of a $5 billion cut to SNAP that will occur on November 1, which will reduce SNAP benefits for all participants – whether they are seniors, children, people with disabilities, veterans, or others who use SNAP during tough times to put food on the table.

SNAP is working the way it is supposed to: it grows when the economy is bad and more Americans are struggling; when the economy improves, its cost and caseloads shrink. The right way to reduce SNAP costs is to get the economy going and more people into good jobs.

-Nan Madden