NAEYC CHILDREN’S CHAMPIONS SPECIAL UPDATE
JANUARY 10, 2013
Highlights of the Fiscal Cliff:
Unfinished Part of Deal Leaves Open Potential for Large Cuts to
Child Care, Head Start, Education and Other Programs in 2 Months
Thank you to everyone who wrote and called over the last few months to urge Congress and the White House to deal with deficit reduction without unsound cuts to programs that help low- and moderate- income families, and to raise revenue in ways that are fair. Below are highlights of the “fiscal cliff” deal, but also a warning that our work is far from over. The deal also delays for only two months the sequestration (significant automatic cuts to early childhood and all other discretionary domestic and defense programs). The two-month delay in automatic cuts will end at the same time that Congress needs to take a vote on the debt limit, which could lead to a trade of more cuts.
For a Glossary of Key Terms (including sequestration and tax spending) and to learn how federal early childhood education funds touch children, families and providers, click here.
Highlights
Unemployment Insurance Benefits and Food Stamps:
Unemployment insurance (UI) benefits were scheduled to end for roughly 2 million people. The deal extends the UI benefits for 2013. (This does not change the duration for which someone can collect benefits.) In addition, the Farm Bill also was extended for one year without changes to Food Stamps/SNAP benefits.
Revenues and Taxes:
The payroll tax holiday (a 2% reduction in the payroll tax started in 2010) is terminated. This applies to low-, moderate- and upper-income taxpayers.
Tax rates rose for individuals earning over $400,000 a year (and for joint filers earning over $450,000 a year). While this is movement to restore the deficit creating cuts in tax spending in 2001 and 2003, it achieves less revenue than the President’s request to maintain the tax benefits from 2001 and 2003 only for those earning under $250,000 a year. These changes are considered permanent.
Some tax credits for low-income people including the Earned Income Tax Credit (EITC) and the refundable Child Tax Credit are extended for another 5 years.
Sequestration/Program Cuts:
The previous deficit reduction deals already cut domestic discretionary spending by $1 trillion. The sequestration (cuts of roughly 8% across funding for all human services including Head Start, child care, K-12 education, early intervention, job training, WIC) was scheduled to take effect automatically on January 2. The “fiscal cliff” deal delays the start of those cuts for 2 months (end of February).
What Do We Do Now?
These next few weeks are critical. Continue to let your members of Congress know that cutting programs such as child care, Head Start, child nutrition, and other basic human needs is unsound economic and social policy. When families don’t have affordable early childhood education, they have more difficulty taking and keeping jobs, employers have a less stable workforce, and children lack the support to reach their developmental and education potential. A strong economy invests in human capital, including our youngest children. Tell them stories of how these federal funds for child care, Head Start, education and early intervention make a difference for children, families and high-quality services.
How to Contact Your Members of Congress:
Go to NAEYC’s Take Action Now page today! There you can find and email your members of Congress using just your zip code.
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