Last week the president offered up his new budget. Budgets are moral documents, as Jim Wallis likes to say, and I agree with that. How we spend our money - how we act as stewards - reflects our values.
President Obama has offered up a budget that will help to decrease poverty (at least modestly), offer historic levels of funding to schools, and will over the long run reduce the deficit. The Bush-era tax cuts for the wealthiest Americans will expire under the president's plan and thus revenue will increase.
America's reckless spending on the military, however, will continue to increase (military spending will not be part of the president's call for a 3-year spending freeze).
There are other issues - some of them quite small in comparison to larger budget concerns - but nonetheless important that have been overlooked.
Let's start with some of the brighter spots.
The Half in 10 Campaign: The Campaign To Cut Poverty In Half In Ten Years likes the general philosophy that guides the president's budget:
The Half in Ten Campaign believes that any strategy to cut the U.S. poverty rate in half over the next 10 years must be based on four fundamental principles: promoting decent work, ensuring economic security, providing opportunity for all, and helping people build wealth. The president’s budget released earlier this week reflects those same principles by laying out an agenda for job creation, investing in income and work supports even in the context of a discretionary spending freeze, offering an education and workforce agenda that promotes opportunity, and championing policies that will allow Americans to save and build for the future. Half in Ten urges Congress to pass a budget resolution that adopts and builds on these investments with special emphasis on job creation for low-income and minority communities.
As Congress debates a jobs package, the Half In 10 campaign notes that the faith community is calling for specific proposals:
Target job creation programs to low-income communities and vulnerable population groups. Targeted programs are needed in order to reach every sector of the population that is suffering from unemployment, especially the most distressed communities. Certain groups with disproportionately high unemployment or low earnings need special efforts to guarantee they are not left out of an economic recovery. Job creation initiatives should target those groups experiencing especially high unemployment, including minorities, workers without a high school degree, and single parents. Legislation must also consider populations with unique needs, such as people of color, displaced workers, workers with disabilities, seniors, low-income youth, and people with limited-English proficiency, by providing worker retraining, education assistance, and other job-related services. In addition, appropriate programs should be targeted to geographic areas with significantly higher-than-average levels of unemployment. National unemployment rates can obscure large regional disparities. In areas around Detroit, Cleveland, and the Central Valley of California, which have experienced the greatest job loss, and regions like the Gulf Coast and the Textile Belt, which were already suffering from elevated unemployment, additional efforts are needed to overcome the job loss crisis.
New jobs that are created should generate sustainable employment and a long-term pathway to economic security. By targeting high growth and priority industries (for example renewable energy, health care, education, infrastructure, and child care),in both the public and private sectors, newly created jobs can provide a pathway out of poverty if they pay a livable wage and include comprehensive benefits. While many of these jobs may be temporary in the beginning, if on-the-job training and proper work experience is provided, they can turn into longer-term careers for those most in need of employment. Job creation efforts should promote economic security, not stand in the way of it.
Assistance should be provided to help vulnerable families impacted hardest by job loss and the recession. Low-income and asset-poor families are hit hardest during a recession because they lack the resources to weather the storm. In addition to creating jobs, legislation must ensure that workers do not lose essential services during their period of unemployment. When workers lose their job, they are supported by safety net programs that ensure access to food, shelter, healthcare, and other critical needs. As unemployment has climbed, so too has the demand for these programs. Congress should ensure that both the programs that serve jobless and low-income people and the states that administer them are adequately resourced.
Our common scriptures present a vision of shared responsibility that endows the notion of work with an inherent dignity yet also commands that we care for the vulnerable among us. Right now, it is imperative that our nation’s leaders turn the economy around and put the country on the pathway to a healthy recovery. Job creation is a top priority for the President and Members of Congress. They must not lose sight of those communities that need the most help. There is a place in this emerging economy for all of us, and properly-drafted legislation will create a workforce that is better trained, stronger, competitive, inclusive, and more viable in the future.
The Center for Budget and Policy Priorities has also called for any new jobs bill to include increased funding related to homelessness:
As part of the economic recovery act signed into law in February, Congress approved $1.5 billion in temporary housing assistance for families that are homeless or at risk of losing their homes due to job loss or other financial hardship. These resources, which the Department of Housing and Urban Development (HUD) distributed to local agencies through the Homelessness Prevention and Rapid Re-Housing Program (HPRP), are now being used to help hard-pressed families pay rent and other housing costs, and to provide them with housing-related services such as landlord-tenant mediation. The HPRP funding allocated thus far will enable local agencies to protect approximately 300,000 vulnerable families from the harshest consequences of the economic downturn.Unfortunately, the employment outlook has worsened considerably since February, and the number of people falling into poverty appears to be rising sharply, based on enrollment data from the food stamp program. Concurrently, reports from various agencies administering HPRP assistance indicate that requests for housing aid are far exceeding the available resources. In Winston-Salem, North Carolina, for example, city officials project that they will be able to assist less than half of the families that need help, while officials in Memphis, Tennessee report that their HPRP budget enabled them to provide financial assistance to only a small fraction of the 880 eligible families that sought aid during the program’s first two months. Similar reports have come from California, Michigan, Nebraska, Florida, Massachusetts, New York, Utah, and South Carolina.To address this unmet need, Congress should consider providing an additional $1 billion in funding for HPRP as part of a forthcoming “jobs bill.” These funds would enable local agencies to help 200,000 families experiencing financial hardship to avert the loss of their homes or to move out of homeless shelters and into stable housing.A further infusion of funds into HPRP would also contribute a modest boost to the economy. During an economic downturn, one of the most effective ways to help the economy — and thereby to create and preserve jobs — is to target financial assistance on low- and moderate-income households, since they are more likely to spend rather than save any increase in income. This is why numerous experts, including economists Peter Orszag (when he was director of CBO) and Mark Zandi of Moody’s Economy.com, have argued that expanding food stamp and unemployment benefits provides a lot of “bang for the buck” in stimulating economic growth. The same point holds true for expansions of rental assistance that relieves the financial stress on very poor families that are having severe difficulty making ends meet.In addition, HPRP assistance would help to strengthen the rental housing market, the continuing weakness of which threatens the nascent economic recovery. Many owners of residential rental property — large numbers of whom are individuals with low or moderate incomes themselves who operate on very thin margins — are under unprecedented financial stress due to record high vacancy rates, falling property values, and tightening credit markets. In recent months, the number of foreclosures of rental properties has risen sharply, increasing financial risks for banks and other lenders, including Fannie Mae and Freddie Mac.Because HPRP provides rental assistance to families that are not currently occupying housing of their own (because they are homeless) or that are at risk of losing their housing due to a decline in their income or other financial hardship, it is one of the few policy measures that actually increases net demand for rental housing and reduces vacancies. Indeed, a rough estimate suggests that for every additional 200,000 families that use rental assistance to secure (or avoid eviction from) rental housing, the national rental vacancy rate could fall by up to 0.5 percent, a significant improvement. And by helping to reduce vacancies, HPRP assistance also helps small property owners maintain their properties in decent condition and remain current on their mortgages.
So far neither the House nor the Senate has included additional funding for HPRP in a discussion of a jobs bill and I know of no advocacy on this from the White House.
The National Low Income Housing Coalition has taken a close look at the budget and offers both praise and concern:
...the Obama Administration (has) released its budget outline for fiscal year 2011. We are pleased that President Obama’s budget for the Department of Housing and Urban Development includes innovative proposals that are steps toward achieving a just and balanced housing policy for the country. However, as millions of families across the country struggle during this devastating economic climate to find and keep housing they can afford, we urge the President and Congress to take further action to address the housing needs of our lowest income neighbors.
Positive and forward-thinking components of the Administration’s HUD budget include:
- $1 billion in funding for the National Housing Trust Fund. The NHTF was established in 2008 and, once funded, will provide communities with funds to build, rehabilitate and preserve housing for people with the lowest incomes (www.nhtf.org). The Administration’s budget documents note that funding the National Housing Trust Fund “will help address the growing shortage of affordable housing, which is one of the most serious and economic problems facing the country” by providing funds to produce 29,000 homes for renters and 7,000 homes for homebuyers. The NHTF was included in President Obama’s first budget request, but Congress has yet to provide funding for the NHTF. It is critical that the President and Congress take active steps to capitalize the NHTF as requested in the FY11 budget.
- $85 million in funding to provide approximately 10,000 new housing vouchers for people who are homeless or at-risk of becoming homeless. While funding these additional vouchers is an important step forward, we know that in this recession we must do more. NLIHC has called on the Administration and Congress to provided 250,000 new vouchers in the current fiscal year to help low and extremely low income people who are otherwise unable to access affordable housing during the economic downturn.
We must object to proposed cuts to programs that produce housing for very low income seniors and people with disabilities (the Section 202 and 811 programs). We support bills currently in Congress to modernize these programs and urge Congress to pass this legislation and fully fund these essential programs that serve some of the poorest and most vulnerable citizens.
- A proposal for a new Transforming Rental Assistance (TRA) initiative that would begin to combine funding streams for 13 HUD programs into one flexible and streamlined source of funding. The President requested $350 million in funding for this initiative that would, according to the budget request, “preserve approximately 300,000 new units of public assisted housing, increase administrative efficiency…and enhance housing choice for residents.” NLIHC looks forward to working with the HUD Secretary and staff on this new initiative.
The inclusion of 100% of funds needed to cover public housing operating costs, a positive increase from previous budget requests, as well as the renewal of existing housing choice vouchers and project-based contracts.
We are grateful that the HUD budget was spared the cuts to domestic discretionary programs that are included in the overall budget. Nonetheless, essentially flat funding for HUD this year is insufficient given the high demand for housing assistance as a result of the recession.
All Americans understand that the deficit is one of the most critical issues we face. As the Center for Budget and Policy Priorities notes, for people living in poverty the deficit could be crushing. In mid-January the Center released a report that noted:
Deficits and debt will rise to unprecedented levels in coming decades without major changes in federal budget policies, so policymakers should set a goal of stabilizing the debt as a share of gross domestic product (GDP) over the next decade, the Center on Budget and Policy Priorities reported today.Reducing the budget deficit is important, but how we do it is just as important. We cannot afford to simply cut or eliminate important domestic programs without causing great suffering and more turmoil.
In its analysis, “The Right Target: Stabilize the Federal Debt,” the Center said that, to reach that goal, policymakers would have to trim projected deficits by more than half— to about 3 percent of GDP — by no later than 2019.
That would be no small achievement. To halve the deficit by 2019, policymakers would need to produce savings that are nearly twice as large as that of any prior deficit-reduction effort. And they would have to do so just as the baby boomers are retiring in large numbers (swelling the ranks of Social Security and Medicare beneficiaries) and health care costs are continuing to grow faster than the economy (driving up per-person costs for Medicare and Medicaid).
While policymakers should focus their attention as soon as possible on reducing the deficit, the report advises against actually having any large deficit-reduction measures take effect until the economy has sufficiently recovered from the recession and is strong enough to absorb them.
A budget reform commission funded by the Pew Charitable Trust and the Peter G. Peterson Foundation recently called for policymakers to stabilize the debt-to-GDP ratio at 60 percent by 2018. While noting agreement with many of that commission’s conclusions about the long-term problem, the Center’s report characterized that particular goal as overly ambitious and unnecessary.
Reaching that target would require policymakers to cut deficits over the 2013-2018 period by almost $825 billion a year, on average. Setting such an ambitious target could actually impede progress.
“Trying to reduce the debt too much too soon could actually make it harder to enact important deficit reduction legislation,” said James Horney, the Center’s director of federal fiscal policy. “If the standard for success requires budget cuts and tax increases that are so big that they’re politically unacceptable, Congress is less likely to take serious action.”
Moreover, there is no evidence that a debt-to-GDP ratio of 60 percent represents a threshold above which the potential harm to the economy rises to an unacceptable level. The 60 percent target is an arbitrary one, the CBPP report noted.
The health care reform bills passed by the House and the Senate - both now seemingly dead - would have helped to reduce the deficit.
Where can we turn to cut the deficit? We must make cuts in military spending. Yes, we need a strong defense to protect the country but what we actually have is a strong offense the funding of which could help collaspe our economy the same way military spending did to the USSR. Jim Wallis writes:
In a preliminary analysis of this budget, Lawrence Korb, former assistant secretary of defense under Ronald Reagan, and other defense experts said that:
A close analysis of the FY 2011 defense budget reveals that it does not go far enough to impose real fiscal discipline on our defense spending … There are a number of reasonable cuts that could be made to this portion of the budget without sacrificing national security or undermining our troops.
Congressman Barney Frank was also at Davos and told me that he is proposing a 25 percent cut in the military budget. He said he will need help from the faith community. I support his effort, and we will saying more about it as details emerge.
The wars we have been fighting are a huge part of the massive deficit we now face, wars that I have also challenged on many other grounds. It’s time to stop subsidizing the shameful profits of the “military industrial complex” that former President Eisenhower warned us about long ago. I personally would favor spending more on the returning veterans who are too often abandoned when their service is over. But cut the defense contractors who serve their own profits much more than any true idea of national security. Protect the veterans, cut the contractors. Now there is one way to attack the deficit.
We in the faith community say we subscribe to the biblical injunction to “beat our swords into plowshares.” So let’s be in the middle of the budget deficit debate and push hard for the right priorities.
Click here to tell the president to cut military spending.
Overall, the president's budget sets the right tone and direction but there is plenty of room for improvement as Congress considers how to best play their role in getting the United State out of the economic crisis handed to us by the Bush Administration.