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Lame Ducks, Grand Bargains, Punts and Cliffs NASBO Fall Meeting Friday, October 5, 2012 Alexandria, VA Federal Funds Information for States.

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Presentation on theme: "Lame Ducks, Grand Bargains, Punts and Cliffs NASBO Fall Meeting Friday, October 5, 2012 Alexandria, VA Federal Funds Information for States."— Presentation transcript:

1 Lame Ducks, Grand Bargains, Punts and Cliffs NASBO Fall Meeting Friday, October 5, 2012 Alexandria, VA Federal Funds Information for States

2 Where we Left Off in August: What’s the Conventional Wisdom? For appropriations, a CR until the election, BUT… For BCA, agreeing to postpone the day of reckoning, BUT… For expiring tax provisions, a bruising fight, possibly informed by the election. For authorizations, probably nothing, BUT...

3 Six-Month Continuing Resolution Through March 27, 2013 FY % for most discretionary programs (not highways) Mandatory programs: current-law level Extends SNAP, TANF, related programs Additional funds for a few programs

4 The BCA and the Sequester Absent a legislated alternative, a sequester will occur on January 2, 2013 Many mandatory and a few discretionary programs are exempt – OMB report sheds light on its interpretations OMB estimates of ATB cuts: 8.2% (nondefense discretionary), 7.6% (nondefense mandatory), 9.4% (defense discretionary) ATB reduction applied to FY 2013 funding in effect on January 2, 2013 (CR level)

5 Lame Duck Possibilities PolicyGrand BargainPuntCliff FY 2013 AppropriationsUnclearLeave for new CongressN/A BCA SequesterReplace/modifyExtend deadlineImplement sequester Expiring tax provisions: 2% payroll taxProbably extendExtendExpires Bush-era ratesMaintain for <$250KExtendExpire AMTPermanent fixExtendExpire at their peril Debt LimitRaiseSmall increaseNo agreement Expiring legislation: Farm bill (nutrition after March)Reauthorize or notExtendNo agreement TANF (after March)Reauthorize or notExtendNo action Medicaid QI, TMAReauthorize or notExtendExpire? UI EUC/EBReauthorize or notExtendExpire

6 CBO Estimates the Fiscal Cliff

7 Sequester Coverage Status of FFIS VIP Series Programs

8 Sequester Coverage Status of FFIS VIP Series Funding

9 Grand Bargain Revenue Options Go after tax expenditures, including: – Itemized deduction for S/L taxes – Make S/L bond interest taxable – Curb or eliminate mortgage deduction – Curb or eliminate tax exclusion for employer-provided health insurance Changes in tax brackets, capital gains, AMT, etc. Create federal sales tax or VAT

10 The “Other” Federal Spending: Tax Expenditures

11 Grand Bargain Spending Options Modify Medicaid’s financing structure; other changes to mandatory programs Statutorily limit health spending growth More block grants (Medicaid and SNAP) Consolidate programs (job-training) Reduce/eliminate funding for select programs (Pell grants, housing, abandoned mine payments) Move all S/L workers into Social Security

12 What’s the Conventional Wisdom? There is none! For more information, visit: Or contact:Marcia Howard Trinity Tomsic


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