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The Debt Deal’s Impact On RI

Tuesday, August 02, 2011

 

The Senate will vote Tuesday on a debt package that raises the ceiling through the end of 2012, cuts $2.4 trillion over the next decade and creates a bipartisan joint congressional committee that will consider long-term spending reform for the country.

But the plan, which was reluctantly supported by Congressmen James Langevin and David Cicilline and passed the House by a 269-161 vote Monday, could have a serious impact on Rhode Island, which depends on hundreds of millions each year from the federal government for everything from health and human services to unemployment support.

While the exact amount of spending cuts to the state has not been revealed, hundreds of federally funded programs in Rhode Island could face reductions or eliminations, including grants for colleges and universities, transportation initiatives and even school-readiness programs like Head Start.

Mazze: Four Major Areas Of Cuts

Dr. Edward Mazze, Distinguished University Professor of Business Administration at the University of Rhode Island, said there are four major areas where Rhode Islanders could be affected by budget cuts: health and human services, military spending, research support for Rhode Island's colleges and universities and reduced fund for unemployment.

Although the proposed plan does not include cuts to Medicare and Social Security for seniors, Mazze said, “Rhode Island, due to its demographics, has a large number of recipients of government benefit programs,” which could be impacted.

Dr. Mazze said businesses with military contracts in the state also must prepare for the cuts.

“Reduced spending for defense will affect large and small Rhode Island businesses with government contracts and more specifically, subcontractors working on research and development contracts,” he said.

Education and Unemployment

Dr. Mazze also said institutions of higher education could faces reductions in funding for several programs. He said the federal government will be less likely to offer grant money to colleges and universities than they have in the past.

“There will also be less funds available for research from federal government agencies including the departments of transportation, agriculture, energy and labor,” he said.

Perhaps the most deflating cuts for Rhode Islanders could be if unemployment funding is slashed. In a state with one of the highest unemployment rates in the nation, Mazze said cuts to funding will negative impact the state’s economy.

“Funds supporting long-term unemployment benefits from the federal government will be severely limited,” he said. “These cuts will make it more difficult for Rhode Island to jumpstart its economy, and works against the creation of new jobs.”

Senators Reed and Whitehouse Reviewing Package

Both Senator Jack Reed and Senator Sheldon Whitehouse are widely expected to vote in favor of the package, but on Monday, their spokesmen said they were still reviewing the details.

"Senator Reed is carefully reviewing the details of the proposal,” Press Secretary Chip Unruh said. “He voted yesterday for over $2 trillion in cuts so it is not a question of controlling the budget, it is a question of priorities. Congress should be doing more to create jobs, not potentially exacerbating unemployment."

Whitehouse spokesman Seth Larson said the Senator is proud the package does not include cuts to Social Security or Medicare.

“Senator Whitehouse has heard from many Rhode Islanders in recent days who are frustrated with our political process, and he shares their frustration,” Larson said. “He is carefully reviewing the proposal announced last night by the President. Throughout the debate on this issue, he heard from many Rhode Island seniors who asked him to fight against cuts to Social Security and Medicare benefits. Sheldon led that fight in the Senate, and he is heartened that this plan does not make any cuts to benefits for seniors.”

Mayor Fung: An Impact On Services

Although he said he had not been completely briefed on the cuts that will trickle down to cities and towns, Cranston Mayor Allan Fung said any reductions in federal funding will likely hurt a numbers of programs in his city.

“Any further federal cuts are going to have an impact on the services we already provide,” Fung said.

Sasse: More Challenges For State And Local Government

State fiscal expert Gary Sasse said any reduction in the flow of federal funds to the state will have a significant impact. He said the state needs to be prepared to face the reality of cuts.

“State and local governments should be bracing to be hit with new fiscal challenges,” he said.

Langevin: Not The Bill I Wanted To Vote For

But despite the difficult challenges that could be on the horizon for Rhode Island, Congressman Langevin said failure to pass the package would have been much worse. He reluctantly voted in favor of the plan, criticizing Republicans for being willing to allow the country to default on its debt.

“This is not the debt reduction bill that I wanted to vote for,” he said. “It does not ask those who have benefited the most from the economic policies of the past decade to pay their fair share. Unfortunately, the consequences of failing to pass it, and not allowing the Treasury to pay all of our bills, would do even more harm to the middle class, our seniors and our most vulnerable citizens through higher interest rates and an even further damaged economy. There is an intractable group of members on the other side of the aisle that is willing to let that happen. That is unacceptable.”

Langevin said he hopes for more sacrifice from those who can afford it moving forward.

“Most importantly, we desperately need to turn our focus back to creating quality job opportunities, which should always be our most important economic priority,” he said. “As we move forward to the next stage of the deficit reduction plan passed today, we must have the courage to take a balanced approach that asks for shared sacrifice by those who can afford it, particularly from large corporations and the wealthiest few who are paying historically low taxes. That way we can return to a strong and prosperous economy and put our citizens back to work.”

Cicilline: A Lot About This Bill I Don’t Like

Cicilline agreed with Langevin’s assessment. He said he voted for the package because he didn’t want to see the nation default.

“In order to prevent a first ever default on our nation’s obligations, and to avoid the very real potential of an economic catastrophe, I voted in favor of the compromise legislation that was passed today in the U.S. House of Representatives,” he said. “To be clear, there’s a lot about this bill I don’t like, but my prerequisite for voting in favor of this bill was that we avoid a default and we protect Social Security, Medicare, and Medicaid beneficiaries, which this bill does.”

Like Langevin, Cicilline said the alternative was much worse.

“There’s no question that the single biggest job killer for our country would have been a default,” he said. “In the coming months Congress must build off of this compromise legislation to pursue a balanced approach to reduce our nation’s debt and redouble our focus on putting people back to work.”

 

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