Casey Outlines Alternative Plan to the Sequester

Sequester will Have Significant Jobs Impact in PA, Additional Costs to Communities

Washington DC- Today, U.S. Senator Bob Casey (D-PA) detailed an alternative plan to the sequester that will reduce spending and generate revenue through a balanced approach. During a conference call Senator Casey detailed the potential economic effect that could occur if the sequester takes effect and called on Congress to come together on commonsense steps to avoid it.

“Rather than slashing programs that are critical to job growth and vital to our Communities in Pennsylvania, we need a balanced approach in the best interest of our economy,” said Senator Casey.  “In order to strengthen the economy, we need to reduce the deficit in a balanced way by cutting government waste and closing tax loopholes for wealthy special-interests. Allowing these indiscriminate cuts to wreak havoc is inexcusable when there is an alternative. The American people deserve a balanced and reasonable approach that will protect middle class families and create jobs.”

Major Provision of the Alternative include:

Defense Savings

The American Family Economic Protection Act fully protects the Defense Department, like other Federal agencies, from sequestration until January 2, 2014.  Throughout 2013, no sequester would be implemented, and the existing limits on security-related spending would continue to apply.

Twenty-five percent of the overall costs of suspending sequestration would be offset by very modest reductions in the overall level of defense spending in the future.  These reductions would total $27.5 billion, or 0.5 percent of defense spending between Fiscal Years 2013 and 2021.  The reductions would not begin until Fiscal Year 2015, when the war in Afghanistan is expected to end. 

Agriculture Savings

The American Family Economic Protection Act saves $27.5 billion over 10 years by cutting farm subsidies and extending certain Farm Bill programs that were left out of the recent Farm Bill extension.  The bill ends direct payments, which are currently provided regardless of yields, prices, or farm income.  This provision saves approximately $31 billion.  Of that total, $27.5 billion is used for deficit reduction

The Buffett Rule

The American Family Economic Protection Act would adopt the Buffett Rule, which would ensure that wealthy taxpayers cannot pay tax at a lower effective tax rate than middle class families.  The bill applies the Buffett Rule to taxpayers with adjusted gross incomes greater than $1 million — after subtracting charitable contributions — who are paying less than a 30 percent average tax rate in combined income tax, alternative minimum tax, and the employee’s portion of the payroll tax.  Specifically, the Act would require these taxpayers to pay a 30 percent tax on all of their adjusted gross income (less charitable contributions), phased in between $1 million and $5 million.  This provision would reduce the deficit by approximately $54 billion over 10 years.

Closing an Oil Industry Tax Loophole

The American Family Economic Protection Act eliminates a special tax loophole now enjoyed by the oil industry.  Specifically, the Act would include oil from tar sands among the petroleum products that are subject to taxes that support the oil spill liability trust fund.

In January of 2011, the IRS determined that the definition of crude oil for purposes of the oil spill liability trust fund does not include tar sands or oil sands.  Yet there is no good reason for this special exclusion.  Tar sands are refined using the same processes as those used in the refining of crude oil, and oil spill liability trust fund revenues are used to clean up oil spills from oil derived from tar and oil sands.  No distinction exists between finished products refined from crude oil or those refined from tar sands.  This provision would reduce the deficit by approximately $2 billion over 10 years

Senator Casey on Monday outlined the jobs costs to PA.  Below are additional ways the sequester would have an impact across the state:

• Pennsylvania will experience deep cuts in funding for housing and community development: The Community Development Block Grant (CDBG) program provides communities with resources to provide decent housing, expand economic opportunity for local residents, and create jobs through the retention and expansion of businesses. The Housing Choice Vouchers (HCV) program assists low-income and elderly Americans afford safe and clean housing in the private market. Across-the-board cuts would have serious consequences for these programs in Pennsylvania by reducing CDBG funding by $8,734,647 and allowing the HCV program to support 3,961 fewer families. [CBPP, 2/14/13; HUD CDBG; HUD HCV]

• Law Enforcement and Public Safety Funds for Crime Prevention and Prosecution: Pennsylvania will lose about $509,000 in Justice Assistance Grants that support law enforcement, prosecution and courts, crime prevention and education, corrections and community corrections, drug treatment and enforcement, and crime victim and witness initiatives. [WH 2/24/13]

• Reduced Staffing at Corrections Facilities: All Federal Correctional Workers in the country, including the nine federal prisons in the state of Pennsylvania will be furloughed for 112 hours each from April 20-September 30, 2013. [Council of Prison Locals 2/25/13]

• $2,032,901 less to provide seniors with meals on wheels and nutrition services: Senior nutrition programs provide meals and nutrition services to seniors in group settings like senior centers or through delivery to individuals who are homebound because of illness, disability, or geographic isolation. Across-the-board cuts would reduce funding used to ensure that Pennsylvania seniors remain healthy and independent. [AOA accessed on 2/12/13; DPCC Calculations Based on Senate Appropriations Subcommittee on Labor, Health, and Human Services, and Education, and Related Agencies, 7/25/12]

• Pennsylvania will experience deep cuts in funding for housing and community development: The Community Development Block Grant (CDBG) program provides communities with resources to provide decent housing, expand economic opportunity for local residents, and create jobs through the retention and expansion of businesses. The Housing Choice Vouchers (HCV) program assists low-income and elderly Americans afford safe and clean housing in the private market. Across-the-board cuts would have serious consequences for these programs in Pennsylvania by reducing CDBG funding by $8,734,647 and allowing the HCV program to support 3,961 fewer families. [CBPP, 2/14/13; HUD CDBG; HUD HCV]

• STOP Violence Against Women Program: Pennsylvania could lose up to $271,000 in funds that provide services to victims of domestic violence, resulting in up to 1,000 fewer victims being served [WH 2/24/13]

• Fewer inspections to prevent foodborne illness in Pennsylvania: The across-the-board cuts under the sequester could force the FDA to conduct 2,100 fewer inspections of food facilities nationwide, which could raise the risk of safety incidents and lead to more outbreaks of foodborne illnesses like salmonella or E. coli. The USDA’s Food Safety and Inspection Service (FSIS) may have to furlough employees, which could cause serious delays in food processing and inspection that would result in millions of dollars of losses to the agriculture sector. FSIS inspectors are responsible for ensuring safe conditions at over 6,000 facilities nationwide, including 368 in Pennsylvania. [White House, 2/8/13; FSIS, 2/4/13]

• 2,300 Children Could Lose Head Start: Head Start and Early Head Start services would be eliminated for approximately 2,200 children in Pennsylvania, reducing access to critical early education. Head Start promotes the school readiness of low-income children from birth to the age of five years-old by enhancing their cognitive, social, and emotional development. These types of early education services improve students’ chances of success in school. Across-the-board spending cuts could result in a $13.2 million reduction in funding, limiting children’s access and costing 609 jobs. [HHS, accessed 12/17/12; NEA, 2/5/13; Senate Appropriations Subcommittee on Labor, Health, and Human Services, and Education, and Related Agencies]

• Military Furloughs: In Pennsylvania, approximately 26,000 civilian Department of Defense employees would be furloughed, reducing gross pay by around $150.1 million in total. [WH 2/24/13]

• Army: Base operation funding would be cut by about $7 million in Pennsylvania. [WH 2/24/13]

• Job Search Assistance: to Help those in Pennsylvania find Employment and Training: Pennsylvania will lose about $866,000 in funding for job search assistance, referral, and placement, meaning around 36,860 fewer people will get the help and skills they need to find employment.  [WH 2/24/13]

• Teachers: Pennsylvania will lose approximately $26.4 million in funding for primary and secondary education, putting around 360 teacher and aide jobs at risk. In addition about 29,000 fewer students would be served and approximately 90 fewer schools would receive funding. [WH 2/24/13]

• Work-Study Jobs: Around 3,160 fewer low income students in Pennsylvania would receive aid to help them finance the costs of college and around 2,290 fewer students will get work-study jobs that help them pay for college. [WH 2/24/13]

• Pennsylvania will lose $73.0 million in funding for medical research and innovation: The National Institutes of Health (NIH) is the largest source of funding for medical research in the world. NIH’s work has improved human health by increasing life expectancy and making breakthroughs in the treatment of cancer, heart disease, and diabetes. NIH research also has a significant economic impact, directly supporting hundreds of thousands of jobs and supporting the medical innovation sector which employs 1 million Americans. Across-the-board budget cuts would mean that reduced NIH award funding would impede medical research and cost 1,209 jobs. [NIH, accessed 2/12/13; UMR, 2/13]

• $13.9 million less for scientific research in Pennsylvania: Under the across-the-board cuts forced by sequestration, at approximate FY2012 award allotment levels Pennsylvania would lose roughly $13.9 million in funding from the National Science Foundation (NSF), resulting in fewer awards to support job-creating research into new scientific breakthroughs. The NSF is the funding source for approximately 20% of all federally supported basic research conducted by America’s colleges and universities, and supports the basic research that leads to scientific advancement in fields like nanotechnology, mathematics, and computer science. [NSF, accessed 2/12/13; DPCC calculations based on NSF, accessed 2/12/13]

• Overall Impact of Sequester On Jobs: Job losses due to DOD cuts: 39,941. Job losses due to non-DOD cuts: 38,513. Total Job losses due to sequestration: 78,454 in PA in FY’12/FY’13 [George Mason University Study 7/17/12/]

###