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Federal Budget Deal Passes: What it Means

(from LISC) A summary of the impact of the debt ceiling increase deal on federal housing programs was provided by LISC. As others weigh in with further analysis we will bring it to your attention. Paraphrasing from this call to action, contact from you and your local leaders about local projects is without any doubt the most significant way to impact the congressional outcome.

What the Budget Deal Means on Federal Housing Programs

The Senate has just passed the budget deal 74-26. The House passed the bill yesterday and the President is certain to sign it later today. Here's what it means.

Section 4, HOME, AmeriCorps, SIF and other annually appropriated domestic programs
The budget deal places aggregate "caps" on discretionary spending programs for each of the next 10 years. From a federal budgetary perspective, this achieves nearly a trillion dollars in "savings" because the caps are set at levels lower than would be necessary to "maintain current services," that is, lower than an inflation-adjusted freeze.

As a practical matter, the budget deal's aggregate spending cap for FY 2012 is actually $24 billion higher than the amount set in the House-adopted budget resolution earlier this year, so the overall pressure on domestic spending--for FY 2012--is somewhat lessened. However, even to stay within this new 2012 cap, House and Senate appropriators will still need to report out significant cuts, so we will be calling on you throughout August and beyond to energetically lobby key members of Congress from your districts and states to protect Section 4, HOME, and other priority funding for FY 2012. Remember, contact from you and your local leaders about local projects is without any doubt the most significant way to impact the congressional outcome.

LIHTC and NMTC The other big piece of the budget deal is the creation of a temporary joint committee of the House and Senate to assemble, by Thanksgiving, a package of entitlement reforms and tax reforms to save an additional $1.5 trillion by 2021. The joint committee will be composed of 6 Democrats and 6 Republicans - 3 each from the House and Senate (to be appointed before mid-August) Congress will be required to vote on the joint committee's package without amendment. The joint committee's work could possibly impact the Low Income Housing Tax Credit and the New Markets Tax Credit because there is some political momentum behind the idea of eliminating many of the tax code's current credits and deductions in order to reduce individual and corporate tax rates and to raise revenues for deficit reduction.

To be clear - the Joint Committee's work is purely speculative and the Republican leadership has already said they don't want the Joint Committee to touch revenues. However, to be prudent, we will be working actively--in coalition with other groups--to bolster support for LIHTC and NMTC. We will be calling on you throughout September and beyond to energetically lobby key members of Congress - especially the tax writing committees and members of the special joint committee - to underscore the unique and essential importance of LIHTC and NMTC in generating affordable rental housing and jobs throughout the country. As with the spending programs above, contact from our local leaders about specific LIHTC and NMTC projects is the most significant way to impact the proposals emerging from the joint committee.

Automatic Cuts Under the budget deal, if Congress fails to enact an entitlement and tax reform package developed by the joint committee (described above), there will be automatic cuts in both defense and non-defense spending programs beginning in 2013 and lasting through 2021. These automatic defense and non-defense cuts are intended as a "Sword of Damocles" hanging over the Congress to motivate the success of the joint committee - since many in Congress will want to avoid this result. If these automatic cuts are triggered, they will adversely impact Section 4, HOME, and other annually appropriated domestic programs that are important to our mission of building sustainable communities. (Some low-income programs are exempt from these automatic cuts - Medicaid, SSI, Food Stamps, TANF, WIC, Child Care, Child Nutrition - but Sec. 4, HOME, AmeriCorps, and SIF are not exempt.)

In sum, it is more important than ever that every one needs to build and strengthen relationships with your Members of Congress and Senators. In the policy world, we call this stewardship.