Federal Budget Discussion Continues – Medicare, Medicaid, & CDBGs at Risk of Funding Reductions

With less than an hour to go before implementing a federal government shutdown this past Friday, Congress came to an agreement over the federal budget – they cut $2 billion in spending from transportation and housing programs and passed another weeklong extension so that the full budget compromise could be drafted. The new deadline is Friday, April 15 and President Obama is expected to deliver a speech on Wednesday, April 13, outlining the final cuts. Congress will still need to vote on this proposed budget.  From CNN Business:

Details are sketchy as to what will be included in the longer compromise bill. It will set spending levels $38.5 billion lower than at the beginning of the year; that much is known. But the specific program cuts remain unclear…

Already lawmakers have trimmed $12 billion from around the edges of the 2011 budget. That meant an end to programs that provided funds for broadband access in rural communities, education, highway construction and the Smithsonian Institution, among other things.

It is being predicted that President Obama will propose reductions in spending on entitlements such as Medicare and Medicaid and that he will be renewing his call for tax increases on the rich. From the Washington Post:

In an effort to go on the offensive in the battle over government spending, Obama will look for cuts in “all corners of government,” senior adviser David Plouffe said on several Sunday talk shows.

Although Obama’s health-care law is projected to curtail Medicare spending over time, “we have to do more,” Plouffe said Sunday, marking the first time the administration has made an explicit commitment to changes in entitlement programs for the purpose of deficit reduction.

Contrasting the president’s approach with what Republican leaders have put forward, Plouffe said Obama will use a “scalpel” and not a “machete” as he seeks to preserve funding for education and other areas he considers crucial to the country’s long-term economic success.

In addition to Medicare, Medicaid, and a potential overhaul of the Social Security system, proposed shifts include the Community Development Block Grant (CDBG) program. The CDBG program has proven to be a reduction possibility for federal legislators with President Obama proposing a 7.5 percent reduction and the House Republicans proposing a 62.5 percent reduction in CDBG spending. Glen Whitley, President of the National Association of Counties (NACo) argued against major cuts to the CDBG program at a news conference to release a preliminary report on CDBG’s impact on local communities.

NACo, the U.S. Conference of Mayors (USCM) and the National League of Cities (NLC) released the report by IHS Global Insight.  It concluded that CDBG grant funds of $3.95 billion generated 120,000 jobs and contributed $10.7 billion in gross domestic product over the past year.

To read more about NACo’s efforts to protect CDBG funding, please click here.

Other spending reductions expected to be announced include the Consumer Operated and Oriented Plan of President Obama’s healthcare law, contributions to the United Nations and international banks and financial institutions, and many cuts to domestic discretionary programs. Programs that were spared cuts include the Washington DC Metro system, HeadStart and Americorps; Obama’s signature education reform initiative, “Race to the Top,” and the Securities and Exchange Commission actually received more funding. To read more details on the program cuts and spending changes, please click here.

To view MACo’s prior coverage of the 2011 federal budget discussions, please click here.

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