Yesterday, the White House formally submitted to Congress its 2013 budget proposal for the fiscal year that begins on October 1, 2012. While JFNA recognizes the extreme seriousness posed by the burgeoning public debt which has topped $15 trillion and the annual federal deficit well exceeds $1 trillion, it is clear that the solution to this fiscal mess cannot be disproportionately borne by the most vulnerable in our society. JFNA understands that all solutions to the debt crisis require shared sacrifice and should be balanced while promoting economic growth, reducing the budget deficit, and creating jobs.
JFNA will work closely with our friends in Congress on both sides of the political aisle to ensure that our movement's budget priorities are adequately funded in the years ahead. To support us in that effort, we urge you to set up meetings with your Senators and Representatives to:
- Continue to educate them about the important work in which our social service agencies engage;
- Promote our collective program priorities; and
- Insist that charitable contributions should receive favored treatment in any reduction of taxed exclusions and deductions.
At $3.803 trillion and more than 2000 pages, the President's FY 2013 budget is the largest budget submission ever sent to Congress. This year's budget includes $1.261 trillion in discretionary spending, divided between $851 billion in military, security, and foreign affairs expenditures and $410 billion for non-security domestic programs. Beyond the discretionary spending, the remainder of the budget is set aside for entitlement programs like Medicare, Medicaid and Social Security and other mandatory programs (totaling $2.293 trillion) and interest on the U.S. debt ($248 billion). Under this budget forecast, large deficits persist into the indefinite future, standing at $1.3 trillion for 2011 and $1.327 trillion for 2012. The deficit then would drop to $901 billion for 2013 but would stay above $600 billion for each year through 2021 with the exception of 2018 ($575 billion).
The FY 2013 budget attempts to implement the tight discretionary spending caps that became part of the Budget Control Act of 2011 and the President's budget puts "forward a plan that will, together with the deficit reduction enacted last year, cut the deficit by more than $4 trillion over the next decade." This is accomplished by making "tough choices: cutting waste where we can, reducing spending in areas that are not critical to long-term economic growth and job creation, and asking everyone to pay their fair share." For instance, the budget would significantly reduce or eliminate 120 federal programs, saving $20 billion, and implement new tools for fraud prevention in Medicaid and Medicare, saving billions of dollars over the next decade. At the same time that it makes many cuts to a wide variety of federal programs, the President's budget calls for increased spending to bolster domestic manufacturing, lure jobs back from overseas, hire teachers, retrain workers and rebuild the nation's infrastructure.
In his budget submission, President Obama again proposes to reduce the value of itemized deductions for individuals making more than $200,000 (or $250,000 if married filing jointly). Today, they can deduct 33% or 35% of a qualified expense. Under the President's proposal, they would only be allowed to deduct 28%. The budget proposal would:
"Reduce the Value of Itemized Deductions and Other Tax Preferences to 28 Percent for Families With Incomes Over $250,000. Currently, a millionaire who contributes to charity or deducts a dollar of mortgage interest, enjoys a deduction that is more than twice as generous as that for a middle-class family. The proposal would limit the tax rate at which high-income taxpayers can reduce their tax liability to a maximum of 28 percent, affecting only married taxpayers filing a joint return with income over $250,000 (at 2009 levels) and single taxpayers with income over $200,000. This limit would apply to: all itemized deductions; foreign excluded income; tax-exempt interest; employer sponsored health insurance; retirement contributions; and selected above-the-line deductions."
Another provision in the budget would further reduce itemized deductions for those with taxable income more than $250,000 (or $200,000 if single). This reduction would cut itemized deductions by 3 percent of the amount of income that exceeds the $250,000 or $200,000 threshold. JFNA has long advocated that any reduction in the value of itemized deductions should not apply to the charitable deduction. On the very same page of the Budget where the Administration would reduce the value of all itemized deductions, the President proposes a new "Buffett Rule." No household making over $1 million annually "should pay a smaller share of its income in taxes than middle class families." This tax proposal was named in honor of Warren Buffett who has pointed out that his effective tax rate is lower than his secretary's. The President insists that "the Administration will work to ensure that this rule is implemented in a way that is equitable, including not disadvantaging individuals who make large charitable contributions." The same exception should be made with the itemized deduction. JFNA released a statement in response to the proposed change.
The President's budget does contain continued support for the IRA Charitable Rollover, long championed by JFNA, urging its extension through the end of 2013.
There are several cuts to the Medicaid program that, if enacted, will have ramifications for our community. These budgetary changes center on how a state will be reimbursed for the services it offers the neediest in its communities. The proposal, known as a blended rate, would reduce the federal share of Medicaid costs, and shift more of the financial burden to the states prompting them to cut payments to health care providers, including a vast array of Jewish partner agencies. The blended rate would be set at a level that provided the state with less federal funding than required under current law. The loss of the overall rate, combined with other technical adjustments to the Medicaid program amount to a loss of over $53 billion over a ten year period.
The overall reaction on Capitol Hill to the submission of the budget was immediate and predictable. According to House Speaker John Boehner (R-OH), "the President's budget is a gloomy reflection of his failed policies of the past, not a bold plan for America's future. It is bad for job creation, our economy, and America's seniors." House Democratic Leader Nancy Pelosi felt "President Obama has laid out an innovative blueprint for restoring opportunity for all Americans and for constructing an economy that is built to last. The budget is balanced, fair, and responsible and is an investment in our economic growth, in job creation, and in a stronger, thriving middle class."
So is this budget submission important? Senate Majority Leader Harry Reid (D-NV) has already made it clear that it would be foolish for Senate Democrats to put forward a budget, because the Budget Control Act passed this summer included specific spending caps for 2012 and 2013. Senate Minority Leader Mitch McConnell (R-KY) said on Sunday that he intends "to offer the President's budget for him so he'll have a chance to get a vote on it. You know, last year I had to offer his budget for him. Senate Democrats haven't passed a budget in a thousand days even though the law requires it." When Senator McConnell formally offered the Obama proposal last year in its introduced form, it failed by a vote of 97-0. Moreover, even if a budget were to pass, it is not binding law on the White House or Congress or the country. A budget is intended to focus the country's priorities with substantive law embodied in appropriations bills and pieces of policy legislation. In that sense, it is important but as a representing a vision of where this President would lead this country.
IMPACT ON DISCRETIONARY PROGRAMS
While the material below makes clear that not every federal program the federation system cares about would be cut, many are! We have reviewed thousands of pages of budgetary material and the program information found below is correct as we now know it, but we will be further analyzing and updating our analysis as appropriate. In this section we discuss in alphabetical order specific programs of interest and how they are affected by the FY 2013 budget proposal as compared to both FY 2011 (the last complete year of funding) and estimates for FY 2012.
Under President Obama's budget, the Department of Health and Human Services' Administration for Children and Families (ACF) would receive a slight increase from $16.950 billion in FY 2011 to $17.058 billion in FY 2013 ($16.739 billion estimated for FY 2012).
Autism Spectrum Disorder occurs in 1 of 110 children. Research for Autism and other Developmental Disorders is funded through the Department of Health and Human Services' Health Resources and Service Administration. This program would be flat-funded from $47 million in FY 2012, a slight reduction from $48 million in FY 2011.
The Department of Agriculture's Commodity Supplemental Food Program which provides monthly packages of nutritious food, primarily to low-income seniors. This program would be cut from $196 million in FY 2011 and an estimated $192 million for FY 2012 to $187 million.
The Department of Health and Human Services' Community Services Block Grant, which provides effective resources for a number of federation agencies to help eliminate poverty, would be cut nearly in half to $350 million from $679 million as enacted in 2012. The Administration notes that while it "supports the important goals of the CSBG program," it "proposes a reduction of $329 million in order to meet fiscal targets. Introducing a system of standards and requiring competition will make better use of limited taxpayer funds by promoting innovation and assuring low-income families and communities are receiving high-quality services."
The Department of Agriculture's Emergency Food Assistance Program, which allows food banks (including kosher food pantries) to purchase commodities to re-supply food stocks, would receive a slight increase in funding from $247 million in FY 2011 and an estimated $260 million in FY 2012 to $270 million.
FEMA's Emergency Food and Shelter Program, which funds local community agencies to provide assistance with food, shelter, and utilities and a national program on which JFNA sits on the national board, would be cut from $120 million in FY 2011 and FY 2012 to $100 million.
The Department of Health and Human Services' Low Income Home Energy Assistance Program, which provides emergency heating assistance for many seniors and low-income individuals in the Jewish community in the winter and air conditioning in the summer, would be cut from$4.701 billion in FY 2011 to $3.020 billion in FY 2013 ($3.472 billion estimated for FY 2012).
While the Department of Health and Human Services' Administration on Aging (AOA) budget which oversees the Older Americans Act would appear to receive a substantial increase from $1.507 billion in FY 2011 to $1.949 billion ($1.491 billion estimate for FY 2012), this is inaccurate and the overall program would receive a slight cut. The budget would transfer the Senior Community Services Employment Program from the Department of Labor and move this program to AOA and flat fund it at $448 million, the same level as for FY 2012. Within the AOA accounts, most individual program lines would remain flat with the exception of Program Innovations, which would not be funded for a second consecutive year (This account formerly funded JFNA's NORCs and Family Caregiver Support) and the Alzheimer's disease demonstration grants which would increase from an estimated $4 million in FY 2012 to $9 million (but reduced from $11 million in FY 2011). Funding for the Aging and Disability Resource Centers is $6 million lower than the FY 2012 estimate but flat funded at $10 million against the FY 2011 enacted level.
The Department of Health and Human Services' Refugee and Entrant Assistance program, which has paid to help resettle tens of thousands of Jews from the Former Soviet Union and other countries, would be increased from $704 million in FY 2011 to $805 million ($768 million estimated for FY 2012).
The flexible funding in the Department of Health and Human Services' Social Service Block Grant (SSBG) provides support for a myriad of federation programs, everything from adoption services to refugee assistance to senior transportation, would be flat at $1.7 billion, the same in FY 2011 and the budget proposal.
The full budget for the Substance Abuse and Mental Health Services Administration (SAMHSA) within the Department of Health and Human Services would be cut from $3.467 billion in FY 2011 to $3.257 billion ($3.435 billion estimated in FY 2012). The Mental Health Block Grant, designed to improve access to community-based health care delivery systems for people with serious mental illnesses and helps fund mental health services at JFS agencies, would receive $459 million, the same funding as FY 2012 and an increase from FY 2011's $419 million. The Substance Abuse Prevention and Treatment Block Grant, which funds services in JFS agencies and other federation agencies to help people remain alcohol and drug free; obtain or regain employment; stay out of the criminal justice system; find stable housing; and enter into recovery, would receive essentially the same funding as for FY 2012 of $1.8 billion (a slight increase from FY 2011's $1.782 billion), but the Administration proposes to split the funding and use 20% of this funding for a new substance abuse prevention discretionary formula grant.
The Social Security Administration's Supplemental Security Income which provides monthly cash benefits as a federally guaranteed minimum income for low-income individuals who are either aged, blind or disabled, includes a program to allow refugees and asylees to receive these benefits for a total of nine years as they seek citizenship. This program for refugees and asylees did not receive any budget allocation in FY 2011 or 2012 and it would be increased by $41 million for FY 2013.
The Department of Housing and Urban Development's (HUD) Community Development Block Grant (CDBG), a flexible funding stream to state and local governments that provides support for programs serving those with low and moderate incomes within the Jewish community, would be cut from $3.673 billion estimated for FY 2012 to $2.932 billion in FY 2013 (and $3.21 billion in FY 2011).
HUD's Section 202 Program, which pays for independent living for seniors, would receive an increase from $396 million in FY 2011 (and an estimated $375 million for FY 2012) to $473 million (but sharply reduced from $875 million in FY 2010). Under this budget, $90 million would be used for service coordinator assistance. No funding would be set aside to allow for the conversion of independent living facilities to assisted living. The budget proposal classifies this submission as "Doing more with less, the Budget proposes reforms to the Housing for the Elderly program to target resources to help those most in need, reduce the up-front cost of new awards, and better connect residents with the supportive services they need to age in place and live independently."
HUD's Section 811 Program, pays for scores of group homes for persons with disabilities within the Jewish community. It would receive a slight additional cut from an estimated $165 million in FY 2012 to $149 million (the same funding level for FY 2011 but a sharp reduction of the $300 million appropriated for FY 2010).
Education and Job Training
The Department of Health and Human Services' Child Care Development Block Grant, which helps support low-income families' access to child care in a number of federation agencies would receive an increase from $2.223 billion in FY 2011 to $2.603 billion (and $2.278 estimate for FY 2011). These programs have collectively allowed Jewish Family Service agencies, Jewish Vocational Service agencies and JCCs to provide tens of millions of dollars of services to children, family, seniors, persons with disabilities, and other vulnerable members of the Jewish and general communities.
The Department of Health and Human Services' Head Start program, which provides comprehensive development services to low-income infants and preschool children including some programs run by JCCs, received $7.559 billion in FY 2011 and would be increased to $8.054 billion ($7.969 billion estimated for FY 2012).
The Department of Education's Individuals with Disabilities in Education Act, the major federal funding program for special education which is used by students in public schools and Jewish day schools, received $12.287 billion in FY 2011 and would be cut to $11.572 billion (and reduced from an estimated $11.706 billion in FY 2012). In addition, the budget provides $30 million, a $28 million increase over 2012, for PROMISE (Promoting Readiness of Minors in SSI), a four agency joint pilot program, to fund and evaluate innovative approaches to improving outcomes of children receiving Supplemental Security Income and their families.
The Department of Labor's Workforce Investment Act provides formula grants for adult job training, dislocated worker job training, and youth services (including funding for summer jobs for young people) which are utilized by JVS agencies. Adult Employment and training activities would be cut to $769 million under this budget compared to $766 million in FY 2012 and an estimated $774 million in FY 2012. Dislocated Worker employment and training activities are more significantly reduced from $1.308 billion estimated for FY 2012 to $1.34 billion (an $1.279 billion in FY 2011) and Youth activities are reduced to $904 million from an estimated $906 million for FY 2012 and $946 million for FY 2011.
The Foreign Military Financing (FMF) program enables selected friendly and allied countries to improve their ability to defend themselves by financing their acquisition of U.S. military articles, services, and training. FMF strengthens Israel's security and ensures a "qualitative military edge" over neighboring militaries. The full budget for FMF was $5.210 million in FY 2012, with the President requesting $5.472 billion in FY 2013, an increase of $262 million from the last budget. Israel received $3.075 billion in FY12 and would receive flat-funding of $3.075 billion in FY13, as agreed upon in the Memorandum of Understanding signed by the two nations in 2007. According to media reports, the President's budget would sharply reduce funding for Israel's missile defense system including Arrow and David's Sling, both of which are jointly operated with the U.S. The President requests $99.8 million for this system compared to FY 2011 funding of $209 million and FY 2012 of $235 million.
While not completely relevant to foreign aid for Israel, the Department of State's discretionary budget authority for a wide range of foreign aid and international assistance programs, including Foreign Military Financing, USAID, the Millennium Challenge Corporation and the Peace Corps among many other programs, received $50.8 billion in FY 2012 and the President has requested $51.6 billion in FY 2013.
If you have questions or comments about these budget materials, please contact Shelley Rood, JFNA's Senior Legislative Associate at 202-736-5880.