Washington, D.C. Budget Debate Outcome Looms Large for Georgia

On Wednesday, May 1 GBPI will host its Spring Policy Forum, Protecting Our Investment in Georgia’s Future: Effects of Federal Budget Cuts on Georgia’s Families, Children and Schools.  You will hear from experts from Washington, D.C. and Georgia on the state’s best options to support schools and families and protect vital investments for the state’s future.

Joan Huffer, director of the Federal Budget Initiative at the Washington, D.C.-based Center on Budget and Policy Priorities, is our guest blogger this week.  

This country is in the middle of an historic debate over the federal budget. The decisions that result from this debate will have a significant impact on almost 10 million people who call Georgia home.

State and local governments rely on federal resources for many public services including, education; building and repairing roads, bridges, airports, and public transit systems; ensuring communities have clean drinking water; protecting public safety; providing health care to the most vulnerable including about 35,000 seniors in nursing homes; reducing homelessness; providing job training to technical college students and others and responding after major tornadoes and other disasters. The decisions made in Washington will have a significant impact on resources for many programs and services in Georgia.

In fact, a large part of the federal budget outside of Social Security, Medicare, defense, and interest payments on the national debt — 41 percent of what’s left — consists of grants to states and localities.

You have heard a great deal about the growth in federal deficits and the debt since 2000 and the seemingly endless battles over what to do about it.  It may come as a surprise to learn that Congress and the president have actually made quite a bit of progress in reducing the deficit.  Since 2010, legislation has been enacted that will reduce federal deficits by $2.75 trillion over the next decade. That doesn’t count the across-the-board spending cuts, known as sequestration that went into effect on March 1 of this year. 

The full impact of these cuts has yet to be felt. Within a few years, the part of the budget that funds many programs state and local governments rely on will shrink to its lowest levels as a share of the economy in nearly 50 years.  Almost a quarter of the resources that come through the federal appropriations process go directly to state and local budgets. 

This summer, the legal limit on the amount of money that the federal government can borrow will once again be reached.  Congress will have to take steps to prevent the country from defaulting on its obligations.

Some members of Congress view the debate over this must-pass legislation as an opportunity to force very deep cuts in federal funding for a range of initiatives, on top of the cuts that are being made and will have to be made under existing laws. 

That’s a bad idea. Unless significant new revenue is included, as the president is calling for, a major legislative package to shrink federal deficits almost certainly will cut deeply into state and local aid. This would make life harder for a lot of people in Georgia and shift more of the cost of paying for schools and other services to the state.

These cuts would come on top of the reductions caused by laws that already passed. Continuing down this path means failing to educate the state’s children, allowing Georgia’s roads and bridges to crumble and standing by while water quality and other public necessities decline. That is not a recipe for strengthening Georgia’s economy and providing opportunities for people in the state.

The country clearly needs to continue to work hard to create a responsible and sustainable fiscal path. But care should be taken to make sure the solution isn’t worse than the problem.   

Joan Huffer is director of the Federal Budget Initiative at the Center on Budget and Policy Priorities. She is the keynote speaker at the Georgia Budget and Policy Institute’s 2013 Spring Policy Forum.

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