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Congress Averts the Fiscal Cliff but Looming Budget Cuts Still Threaten Vulnerable Children

by Caroline DeRosa, Senior Director, Policy & Advocacy

Happy New Year! Although it almost wasn’t a very positive start to the year as the country teetered on the fiscal cliff. Fortunately, at the eleventh hour, Congress struck a deal to avert impending tax hikes and across-the-board budget cuts.  The American Taxpayer Relief Act of 2012, which was passed by Congress on January 1, 2013, and signed into law by President Barack Obama the next day, permanently extends many tax cuts for individuals on taxable income up to $400,000 ($450,000 for couples) and postpones the sequestration cuts that were scheduled to occur this month.  Some tax measure extensions included in this bill worth mentioning are: the Child Tax Credit, the Earned Income Tax Credit, and the American Opportunity Tax Credit (college tuition) – all of which were extended for five years and are vitally important to underserved children and their families.

However, while the tax piece of the equation was addressed, the across-the-board budget cuts were only put on hold for two months.  Since everyone from economists to politicians agrees that allowing the sequester to go into effect is bad news for the country, Congress will likely wind up creating a new plan for reducing the federal budget. But with a March 1st deadline, this means the 113th Congress, which was sworn in this week, will need to start working immediately on a replacement plan. If sequester does go into effect, programs for kids such as Head Start, WIC, education, and community services will see deep slashes to their budgets. If Congress chooses to re-work the budget cutting plan, these plus critical safety-net programs such as Medicaid, CHIP and SNAP/food stamps could be threatened.

So, although the country didn’t leap off the fiscal cliff, there is still much work to be done in the coming weeks to ensure that programs for vulnerable children are protected.  Your voice is critical in making sure that kids are represented in this high-stakes debate about the budget. Stay tuned for upcoming ways you can help!