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Policy Focus: On the Other Side of the Cliff

January 2013

The President and Congress reached a last minute deal to address the fiscal cliff. On Jan. 2, 2013, President Obama signed the American Taxpayer Relief Act into law. Bread for the World published an analysis of the deal, which you can read here.

In addition to largely protecting the economy from the negative impacts of going over the fiscal cliff, the bill contains some key provisions for hungry and poor people. It extends for five years the current Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) benefit levels, which were about to expire. The bill also extends emergency unemployment insurance, preventing 2 million unemployed workers from losing their benefits just a week after Christmas. The bill raises $620 billion in new tax revenue, mostly from allowing tax cuts to expire on wealthier households. While a positive step, this is insufficient to address the country's long-term deficits. Congress will need to return to these issues, raising more revenue and finding more areas to cut spending.

The bill pushed off comprehensive deficit reduction, creating a new March deadline to make additional budget decisions. It delayed the across-the-board cuts for two months—until the expiration of the stopgap budget, which funds most federal programs—as well as when Congress will need to raise the debt ceiling.

Overall, we were pleased that Congress passed the American Taxpayer Relief Act. While the bill cut nutrition education for the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) by more than $100 million, the cut will not affect SNAP recipient benefits and that funding is restored in the years following. Moreover, in the over $2 trillion of deficit reduction enacted over the past two years, we have yet to see any major cuts to programs that address hunger and help people move out of poverty. That is a major accomplishment.

However, whether this latest fiscal cliff deal successfully protects programs for hungry and poor people will depend upon what Congress agrees to in March.

The Farm Bill

Included in the American Taxpayer Relief Act signed Jan. 2 was an extension of the farm bill through Sept. 30, 2013, preventing the country from reverting to 1949 farm law. SNAP and international food aid remain funded. Congress will still have to enact a full reauthorization of the farm bill in 2013, and SNAP and international food aid will continue to be at risk of cuts.

Victory in Foreign Assistance Reform

In the waning days of 2012, Rep. Howard Berman (D-Calif.)—the ranking member on the House Foreign Affairs Committee—introduced the Global Partnerships Act (GPA) of 2012 (H.R. 6644), an attempt to update and modernize U.S. foreign assistance policy. The bill sought to effectively replace the outdated Foreign Assistance Act of 1961 and offer several key reforms, including increased emphasis on program effectiveness, strengthened accountability and oversight mechanisms, greater efficiency by eliminating duplicative programs, improved transparency, and better connection to private investments.

The bill faced long odds of moving in the 112th Congress and subsequently died as the session adjourned; however it provides a framework to work from in the next Congress. Rep. Gerry Connelly (D-Va.) — the only original co-sponsor of the GPA — may take up the issue of foreign assistance reform after the 113th Congress convenes on January 9.

One key reform in the GPA is greater transparency. In the final weeks of 2012, the House unanimously passed the Foreign Aid Transparency and Accountability Act of 2012 (H.R. 3159), which would standardize performance and evaluation guidelines for U.S. foreign assistance programs and make publically available detailed information regarding U.S. foreign development assistance on a program-by-program and country-by-country basis. Introduced by Rep. Ted Poe (R-Tex.), this bill marks a great achievement for Bread for the World and our partners in the development community who have been pushing for foreign aid reforms.

Sens. Richard Lugar (R-Ind.) and Marco Rubio (R-Fla.) introduced a companion bill in the Senate (S. 3310), and while it had strong support, it died in the final days of the 112th Congress due to the objections of one senator. Given the strong bipartisan support for the bill, we are optimistic the bill will be reintroduced and hopeful about prospects for passage early in the 113th Congress.

Photo caption: One of the last actions of the 112th Congress was continuing the farm bill at its current levels through September 2013. The farm bill funds the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). Heather Rude-Turner, 31, of northern Virginia, was once a single mom receiving SNAP. Because of this, she said she can relate to some of the low-income families who bring their children to the childcare center where she works as a teacher. Photo by Laura Elizabeth Pohl/Bread for the World

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