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Education Funding

Fiscal Cliff: How Would White House, GOP Plans Affect K-12?

By Alyson Klein — December 19, 2012 4 min read
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Trying to keep up with all the confusing back-and-forth about the fiscal cliff and how it relates to federal education programs? Here’s your watchword as you read about various proposals: spending.

President Barack Obama and U.S. Rep. John Boehner, the speaker of the House, have been negotiating on the fiscal cliff, but right now, they’re not talking about specific programs. They’re just talking about broad categories: taxes, entitlements (like Social Security and Medicare), and ... spending cuts.

Spending—specifically domestic, discretionary spending—is the big, broad category that most K-12 programs, including Title I grants for districts, special education, and Head Start, get lumped into. The category also includes homeland security, environmental programs, heating assistance for the poor, criminal justice programs, and medical research.

For now, Boehner and Obama are talking about all those programs as if they are part of one big, monolithic block—they’re not getting as specific as an amount for “education” much less “Career and Technical Education Grants” or “Race to the Top.”

So where do we stand right now? The most recent proposal released by Obama would cut $100 billion in non-defense discretionary spending. But the proposed cuts—which would amount to about 2 percent of overall federal domestic, discretionary spending—wouldn’t kick in until towards the end of a ten-year period.

And the Obama proposal would get rid of “sequestration"—those automatic spending cuts that are set to hit just about every federal program, including Title I, special education, Head Start and other key education grants starting on Jan. 2 unless there’s a deal. (Everything you ever wanted to know about sequestration here.) The Obama proposal also would put up a “firewall” between domestic and military programs, so that Congress couldn’t decide to take all of the cuts out of just domestic spending (like education), said Joel Packer, the executive director of the Committee for Education Funding and an all around edu-budget smarty-pants.

The Obama proposal would also make permanent a host of tax credits that educators tend to like, including the American Opportunity Tax Credit (which helps cover the cost of college tuition), and the Qualified Zone Academy Bond program (QZABs), which helps fix up schools, as well as a tax-credit that helps teachers purchase supplies for their classrooms, Packer said.

So what has Boehner put on the table? He’s proposed an additional $300 billion in spending cuts, but it’s unclear how that would impact K-12. And now, the House of Representatives is set to vote on another proposal put forward by Boehner known popularly as “Plan B.” That proposal wouldn’t head off the automatic spending cuts, but it would avert a planned tax increase for anyone making under $1 million dollars a year. Obama’s proposal would keep tax cuts enacted under President George W. Bush in place for everyone making under $400,000 annually.

The problem for groups like CEF—which represents everyone from the teachers’ unions to higher education associations—with Boehner’s proposal is that it doesn’t raise as much revenue as the president’s plan. That ultimately could mean less money for domestic discretionary spending, which could trickle down to less money for schools.

“The less revenue that’s raised, the more likely it is that there are going to be cuts,” Packer said. Of course, there are plenty of people who see room to cut in the department’s budget.

So what about the politics? Well, during a press conference today to announce his new school violence panel, Obama said it’s time for an agreement.

“It is a deal that can get done,” Obama said. “But it is not going to be—it cannot be done if every side wants 100 percent. And part of what voters [in the November election] were looking for is some compromise up here. That’s what folks want. They understand that they’re not going to get 100 percent of what they want.”

In response, Boehner made a blink-and-you’ve-missed-it statement to the media today, essentially saying that if President Obama doesn’t urge the Democratically-controlled Senate to take him up on “Plan B,” the president will be responsible for taking the nation off the cliff.

Here’s part of Boehner’s statement:

“Republicans continue to work toward avoiding the fiscal cliff,” he said. “The president’s offer of $1.3 trillion in revenues and $850 billion in spending reductions fails to meet the test that the president promised the American people—a balanced approach. And I hope the president will get serious soon about providing and working with us on a balanced approach.”

(Early-childhood educators: Does the back-and-forth between those two sound familiar to you?)

What happens from here? It’s anyone’s guess. But time is running out to avert the cliff. If Boehner and Obama reach a deal, rank-and-file lawmakers in Congress (who have largely been left out of negotiations) would have to decide what they think. All of that will take time—and January is right around the corner.

Why should you, as an educator, worry about all this? While most of the cuts for schools wouldn’t kick in until the fall, going over the fiscal cliff could lead to a short, temporary economic setback—or worse. That wouldn’t be good for state and local revenues, which is ultimately bad for schools.

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