Deficit Reduction – Super Committee of Congress

The federal budget for fiscal year 2012, and related spending decisions and tax policy, were kept in limbo awaiting decisions by the President and Congress on how or whether to raise the federal borrowing limit. The deal to raise the debt limit, enacted as the Budget Control Act, sets spending levels for fiscal year 2012 and beyond, and establishes a Super Committee of Congress to resolve spending and tax issues, as well as to consider entitlement reforms.

Why It Matters to Nonprofits

Spending cuts, entitlement reforms, tax reforms, and a credit crisis all have the potential for adversely affecting the operations of some or all nonprofit organizations and the people they serve. Nonprofit human service providers and others that provide essential services may be required to curtail operations or seek alternative funding in the event of program cuts. Individuals who may be no longer eligible for entitlement programs (Medicaid, Medicare, Social Security) will likely turn to nonprofits for assistance. Changes to tax policy could result in reduced incentives for giving to the work of nonprofits, and tighter credit would likely increase borrowing costs that take resources out of a nonprofit’s mission.

Status

The Budget Control Act of 2011, signed by the President on August 2,  raises the debt ceiling in two steps, each time allowing Congress to vote to disapprove the increases, (but those votes would be subject to presidential vetoes that are unlikely to be overridden). Discretionary spending will be cut immediately by $900 billion over ten years, and an additional $1.2 trillion to $1.5 trillion in deficit reduction will be determined later this year. The agreement empanels a 12-member bi-partisan, bi-cameral Super Committee to determine the details of the added spending cuts. The Super Committee plan will be subject to House and Senate votes without amendments by December 23. If the committee fails to reach agreement, the Budget Control Act calls for across-the-board spending cuts: $600 billion from defense programs and $600 billion from domestic programs, with the exception of programs for the poor such as Medicaid and Social Security.

Super Committee Members

House:

• Rep. Jeb Hensarling (R-TX) Co-Chair
• Rep. Xavier Becerra (D-CA)
• Rep. Dave Camp (R-MI)
• Rep.  Jim Clyburn (D-SC)
• Rep. Fred Upton (R-MI)
• Rep. Chris Van Hollen (D-MD)

Senate:

• Sen. Patty Murray (D-WA) Co-Chair
• Sen. Max Baucus (D-MT)
• Sen. John Kerry (D-MA)
• Sen. Jon Kyl (R-AZ)
• Sen. Rob Portman (R-OH)
• Sen. Pat Toomey (R-PA)

Additional Resources

• Text of the Budget Control Act of 2011
• Senate Democratic Summary of Debt Ceiling Deal
• House Republican Summary of Revised Budget Control Act
• President Obama Address: A Bipartisan Approach to Strengthening the Economy (July 23, 2011)
• Congressional Budget Office Debt Ceiling Resources