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FRAC statement of August 2nd on debt ceiling agreement

FRAC Statement on Debt Ceiling

Statement attributable to FRAC President Jim Weill.

Contact: Jennifer Adach, 202.986.2200 x3018

Washington, D.C. -- August 2, 2011 -- As the debt ceiling agreement becomes law today, it is noteworthy that the U.S. Department of Agriculture today posted data showing the largest single month jump in SNAP (food stamp) participation since September 2008, the month that Lehman Brothers went into bankruptcy and the Great Recession downturn accelerated. The growth was driven both by ongoing economic weakness and by natural disasters in the South.

The two events – the SNAP growth of more than 1.1 million people in a month, in the most recent reporting period of May 2011, and the conclusion of the debt ceiling deal – point to both the huge flaws and one protective element in the deal.

The debt ceiling bill is hugely unbalanced, exacting no price from the highest income Americans in the form of revenue increases but focusing almost all of the pain on low-income and middle-income people through spending cuts. This will exacerbate the nation’s huge and growing problems of hunger, poverty and inequality and take key supports away from the neediest people in the country. The damage done starting right away by the discretionary caps will translate almost certainly into harmful cuts in WIC, the Commodity Supplemental Food Program, other discretionary nutrition programs, LIHEAP, a variety of services to children and adults, education and infrastructure.
At a time of terribly weak economic and job growth, the debt ceiling deal will produce added drag on economic growth and job creation, as well as likely further erosion of wages for low- and middle-income families. The deal increases the need for supports at the same time that it weakens those supports.
These economic trends of the last four years have been manifested in four years of rising SNAP participation. The May 2011 SNAP numbers continue to underscore the strengths of SNAP and child nutrition programs like school lunch and breakfast. These investments are key supports for low-income children, seniors and working-age adults, key countercyclical programs, and key safety net components when natural disasters or economic disasters strike. Indeed, as other supports are decimated by the budget deal, the essential role of those programs is heightened. The May numbers in SNAP specifically represent an effective response not just to ongoing wage and job weakness but to natural disasters that occurred this spring (Alabama caseload growth represents the bulk of the month’s SNAP growth).

That, in turn, highlights one important protective element of the debt ceiling deal – that some of the key programs like SNAP, child nutrition, SSI, Medicaid, TANF, and refundable EITC and child tax credits are spared from cuts now and are exempt from cuts in across-the-board sequestration, if the trigger for sequestration is pulled. However, they remain at risk in the supercommittee process. Today’s data further underscore what was already clear to most Democrats and many Republicans, to the Simpson-Bowles commission, and to the Gang of Six – that these programs must be protected from cuts.

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