The Shriver Brief
Principles to Guide the Budget Cuts - Strengthen Our Economy and Protect Our Most Vulnerable
Part 2: The President's 2012 Budget
In addition to the continuing continuing resolutions being passed by Congress, policymakers are now turning their attention to the 2012 budget. The House is expected to release a proposal soon. And the President has released his proposal for the fiscal year 2012 budget.You can check out the White House proposal in a visual format with the New York Times’ interactive budget graphic, and find highlights and analysis in our prior blogpost. Without careful analysis and a balanced approach, deficit-reduction efforts could have unintended and unwanted consequences. The economic recovery, our nation’s fiscal health, and the well being and economic security of American families all rest in the balance. In a recent post, we laid out four principles that should guide our budget cutting. Briefly, they are:
- Evenly Balance Spending Cuts and New Revenues; Austerity Is Not the Answer
- Evenly Balance Defense and Non-Defense Discretionary Spending
- Avoid Making Low- and Moderate-Income Households Worse-Off
- Make Wise Investments in the Future--to Ensure the Economic Recovery and Economic Security for All Americans
Here’s how the President’s proposed budget stacks up by our principles:
Currently, the President’s 2012 proposal is to reduce the deficit with two-thirds cuts, and one-third new revenue. The budget should go further to eliminate inefficient corporate tax loopholes and governmental subsidies. By increasing revenue in responsible ways, we will reduce the need to make drastic and unwise cuts, such as the President’s proposal to slash the Low Income Home Energy Assistance Program. And the budget must share the burden of cuts more equitably. Currently, the budget calls for zero real growth in military spending, but that’s only a 5% reduction from the 2011 request.
Wisely, the President’s budget invests in our future in several ways. It increases funding for K-12 education, provides short-term spending on surface transportation that will create jobs, and long-term investments in innovative technologies and policies that will sustain our recovery. Additionally, the Obama Administration has proposed a $100 million dollar “Pay for Success Bond” program in his fiscal year 2012 budget. If carefully implemented, social impact bonds are a promising development. This funding mechanism allows the funder (which could be private foundations or the government) to pay for innovative social service provision entirely or largely based on whether the providing organization meets agreed-upon performance measures. That spurs effective, efficient programs, and ensures that those programs that don’t work end.
We need to make cuts to control the federal deficit, but doing so blindly will cost jobs and destabilize the fragile economic recovery. Austerity is not the answer. We must be fiscally responsible and still fulfill our responsibility to the most vulnerable in our society. By investing in education and training and funding innovation, we will have a stronger economy. A stronger economy will increase tax revenues in the future and help balance the budget, while strengthening the middle class and helping Americans make ends meet and pursue the American Dream.