The $100 billion that an axe-wielding new Republican majority chopped from the federal budget in the House of Representatives last week wouldn’t make that big of a dent in the nation’s $1.6 trillion deficit for the current fiscal year. But some of the deeper cuts could have a severe impact locally, especially on programs that help lower-income residents and neighborhoods. Consider:
• The Community Development Block Grant program was slashed by more than 60 percent. The city of Knoxville has been heavily dependent on CDBG grants of more than $2 million per year for neighborhood revitalization efforts including blighted property acquisition and home-improvement loans to low-income owners of substandard housing. A cut of this order of magnitude would eviscerate the city’s efforts.
• The Department of Housing and Urban Development program on which Knoxville’s Community Development Corp. has been pinning its hopes for a grant to launch a transformation of dilapidated Walter P. Taylor Homes would be virtually wiped out.
• The federal grant program on which the Knoxville-Knox County Community Action Committee (CAC) depends for much of its funding would be cut by more than half. CAC’s Executive Director Barbara Kelly is “extremely concerned” about its ability to continue an array of services on which many low-income residents depend. A primary emphasis is on enabling the elderly to live on their own by delivering them hot meals once a day, transporting them to doctors’ appointments, and helping them with household maintenance.
• Also cut in half would be funding for community health centers, of which the largest in the Knoxville area is Cherokee Health Systems. While only about 10 percent of Cherokee’s budget is derived from the federal program, its president Dennis Freeman says the cut “could have a significant impact on delivery systems.” (Cherokee operates 20 primary care, mental health, and dental clinics in a 12-county area.) And the cuts would be “penny wise and pound foolish,” Freeman adds “because patients who don’t get primary care end up in hospital emergency rooms at much higher cost.”
The Democrat-controlled Senate is certain to scale back, if not eliminate, cuts in most of the hundreds of programs targeted by the House. So it’s anybody’s guess how much of the $100 billion in House-approved reductions will get enacted. But time is of the essence in resolving differences between the two chambers. Congress must act by March 4 to extend what’s known as a continuing resolution that’s been keeping the entire federal government funded since the start of its fiscal year 2011 last Oct. 1. Because of a stalemate over appropriations for the current fiscal year, the resolution maintains funding at fiscal year 2010 levels, and its lapse would precipitate a government shutdown the likes of which the nation’s only seen once before, in 1995.
The stridence with which rank-and-file House Republicans have been insisting on cuts that run much deeper than even their own leaders had originally recommended suggests that another such impasse could be imminent—if not in March, then when Congress must act to raise the $14.3 billion federal debt ceiling later on this spring.
The need for a debt-ceiling increase is the inexorable consequences of ballooning federal deficits during the Great Recession over the past three years. But despite appeals from the Obama administration and Federal Reserve Chairman Ben Bernanke to keep a vote on the debt ceiling separate from deficit reduction measures, the Republicans appear intent on coupling them to extract further cuts.
There’s no doubt that reining in the deficit and further increases in the debt are a national imperative. At $14.3 trillion, the debt is already approaching 100 percent of the nation’s gross domestic product—a level that begins to cast doubt on the government’s ability to borrow more, and if exceeded could precipitate a financial crisis of the sort that several European countries experienced last year.
So far, though, the House Republicans have been singularly fixated on what’s called discretionary domestic spending, whose roughly $500 billion total accounts for only about 15 percent of the federal budget’s grand sum of $3.7 trillion. Of the balance, some $700 billion goes for defense and other national security spending, which has so far been kept off limits as has the $2 trillion dedicated to so-called entitlement programs, principally Social Security, Medicare, and Medicaid, not to mention interest on the national debt, which is fast approaching $500 billion in its own right.
Unless they are reined in, it’s the cost of the entitlement programs that are going to drive the nation to bankruptcy in any longer run. Yet the House Republicans don’t even address them in their zeal to show that they can whack the deficit in more expedient but shortsighted ways. Nor does President Obama face up to the bigger challenges in the $3.7 billion budget for the fiscal year ahead that he submitted to Congress last week.
The blueprint for doing so is contained in the recommendations of the bipartisan fiscal commission that, to his credit, Obama appointed last year but has since paid little heed to. They call for bringing the national debt down to a more manageable 60 percent of GDP over the next decade through a comprehensive set of spending/benefit reductions and revenue enhancements that are primarily accomplished by well-conceived tax reforms.
Fortunately, the three senators who served on that commission are united in their support of bringing its recommendations to the fore. They span the ideological gamut from arch conservative Sen. Tom Coburn of Oklahoma to liberal Sen. Dick Durbin of Illinois, along with the centrist chairman of the Senate Budget Committee, Sen. Kent Conrad of North Dakota. Conrad has called on Obama to convene a White House summit to begin to set some benchmarks for restoring fiscal sanity, hopefully in time to tie them to a vote to raise the national debt limit.