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Money Matters: Funding for Peace and Poverty Programs, the Financial Bailout - 10/2/08

Money Matters: Funding for Peace and Poverty Programs, the Financial Bailout - 10/2/08

FCNL's Budget Interest Group

 

I. Military Spending Makes Some Moves Toward Peace

II. The Continuing Resolution Addresses Needs of Low-Income People in the United States

III. What's Happening with the Financial Bailout

IV. Tax Extenders Bill Attached to the Bailout Plan
 

Happy New Year!  Yesterday was the first day of the federal government’s Fiscal Year 2009.  If your federal government is still operating, it is because Congress was able to accomplish the absolutely essential task of appropriating money for each of the federal agencies.  As of last week, Congress had not approved any of the 12 appropriations bills on its docket.  So they rolled them all together in one huge package, called a “Continuing Resolution” (or CR) and passed that package over the weekend.  The CR, true to its name, continues funding at previously approved levels for a defined period of time.  This CR will last until March 6, 2009.  So between now and March, all agencies and programs will have the same funding they had during Fiscal Year 2008.   

There were a handful of exceptions to the rule.  First, Congress included three full appropriations bills, for the Department of Defense, the Department of Homeland Security, and the Veterans Administration.  Also, Congress allowed additional funding for a few domestic programs that will run out of money in the middle of the year if additional funds are not allocated now.  Those are described below. 

I. Military Spending Makes Some Moves Toward Peace 

      As part of the continuing resolution, Congress passed a defense authorization bill to allow an increase in pay for military troops and to authorize some new weapons and new programs.  Although the bill authorizes $542.5 billion in military spending, plus $68.5 billion more for the wars in Iraq and Afghanistan, it also includes some measures that will help promote peace. These provisions include authorization of the “Cooperative Threat Reduction” program, a ban on permanent military bases in Iraq, and continued support of the Department of Energy’s nuclear non-proliferation programs.  In addition, the bill did not include authorization for “reliable replacement warheads”—a new form of nuclear weapon.  Read more about what Congress included to work toward peace.

II. The Continuing Resolution Addresses Needs of Low-Income Americans 

The continuing resolution that will keep the federal government running through March 2009 also increases funding for a few programs that assist low-income families. 

• The bill provides $1 billion more than in 2008 for the nutrition program for Women, Infants and Children (WIC).  WIC helps mothers and their infants achieve better nutrition by supplementing purchases of infant food and educating and encouraging pregnant and nursing mothers to eat more healthfully.  The program has been a very effective preventative healthcare measure, linked to significantly reducing Medicaid expenditures on infants.
• The bill provides $23.5 billion more than in 2008 for the Commodity Supplemental Food Program (CSFP).  CSFP is an agriculture department program that distributes commodity foods to infants, mothers and individuals over the age of 60 whose family income is at or below 185% of the federal poverty line.  The CSFP distributes nutritious foods that are often missing in the diets of low-income people in the United States.  Food is distributed through community-based organizations such as food banks.
• $2.5 billion above the 2008 level would go to the Department of Health and Human Services’ Home Energy Assistance program (LIHEAP).  LIHEAP gives case-by-case grants to families whose income is at or below 150% of the federal poverty line who are struggling to pay for home heating costs and other energy needs.
• The bill provides $2.5 million more than the 2008 level to Pell Grants.  Pell Grants help young people from low-income families make it through college by providing need-based grants to cover tuition and other college expenses. 

All of these provisions will help low-income people in the United States get through the current economic recession, but Congress still needs to address the needs of the thousands that have lost their jobs due to market failures in the past several months.  On Friday, September 26, the House passed an economic stimulus package that would expressly help unemployed people by extending unemployment insurance and provide funding for a number of job creation programs.  The Senate, however, was unable to agree to consider the bill.  President Bush has indicated that he would veto this or any other stimulus package.  Visit FCNL's website for more information on the employment crisis and needed provisions of an economic stimulus package.

 

III. What's Happening with the Financial Bailout

A heavily revised version of the Treasury secretary’s controversial bailout plan was expected to pass on Monday but the House defeated it by a vote of 205-228.  The vote was split in both parties, with 140 Democrats and 65 Republicans voting for the legislation, and 95 Democrats and 135 Republicans voting against. Democrats and Republicans have generally agreed that the bailout plan needs to include more oversight of the Treasury secretary’s decisions yet there is still controversy over if and how the bailout could help homeowners with sub-prime mortgages and whether or not it should include a cap on executive salaries.  The Senate voted on their own version of the bailout last night. The Senate voted on a newly-revised version of the bailout late last night and it passed by a wide margin--75 to 24. The bailout is expected to go back to the House this Friday. The most important difference from the House version is that the Senate's version of the bailout plan includes "tax-extenders" and legislation on mental health parity, as discussed below. There are still concerns among House members that the Senate's version will not effectively help homeowners or protect taxpayers. Read more about the bailout and points that FCNL would like to see included in a final bailout package.

IV. “Tax Extenders Bill” Attached to the Bailout Plan

The Senate's version of bailout plan includes a tax extenders package to renew and revise tax credits for renewable energy, mental health parity, tax breaks for victims of natural disasters and the Child Tax Credit that FCNL has been lobbying for.  Senate proponents of including the tax extenders bill hope that attaching it to the bailout plan will force the House to reconsider passing it (it failed in the House earlier this week).  They also believe including tax extenders could boost bailout plan’s popularity with members of Congress and their constituents because it is a way to help “Main Street”, not just Wall Street.  However, there is also concern that the presence of a tax extenders bill would lose votes among more conservative democrats when the bailout plan goes back to the House this Friday.