Statement by AACF Executive Director, Rich Huddleston, on the President's Proposed 2011 Budget

The President's proposed budget for fiscal year 2011 is a bold step towards addressing critical short- and long-term needs for our nation. The budget strengthens the economy and job creation, brings down the deficit and restores fiscal responsibility, and makes major investments to improve the lives of our nation's children and families.

This time last year our nation faced an economic crisis reminiscent of the Great Depression; the Gross Domestic Product fell rapidly; and families faced epic unemployment. In response, the President and Congress acted swiftly by implementing the American Recovery and Reinvestment Act of 2009 (ARRA), which gave a substantial boost in funding to state budgets and to targeted, well-designed programs that not only served our most needy Americans but stimulated the country's economy. In Arkansas, ARRA removed more than 7,000 children from the waiting list to receive child care, saved or created 3,742 jobs, and lifted 58,000 people above the poverty line. Robust federal spending was appropriate and needed to prevent our country from slipping in to the second Great Depression. Now, as the economy recovers, the President rightfully acknowledges with this budget that it is time to shift legislative focus towards job creation, deficit reduction and fiscal responsibility.

The President's $3.8 trillion budget proposes an additional $266 billion to create jobs and strengthen the economy. Of that $266 billion, $100 billion are allotted for a jobs package and $166 billion for other policies. The jobs package could include a $33 billion tax credit to encourage small businesses to hire workers as well as additional funding provided directly to states to help stabilize their budgets. The remaining $166 billion is dedicated to other job creation and economic improvement policies, such as a one-week extension of unemployment insurance benefits; and a 6-month extension of Medicaid relief to states (FMAP) to save and create new jobs and protect health care coverage.

These initiatives should improve the economies and battered budgets of states across the country, including Arkansas, whose citizens have had to bear the brunt of the economic crisis. Arkansas has seen budget cuts of more than $200 million, or nearly 5 percent, in the current fiscal year.

The President sets the right targets for long-term deficit reduction. The President's budget reduces deficits by $1.25 trillion dollars over the next ten years and sets a critical goal of reducing the share of the debt to 3 percent of Gross Domestic Product by 2015. While experts across the political spectrum agree that greater cuts need to be made after the economic recovery to reach the goal of keeping the debt from rising faster than the economy, the President's budget recognizes that cutting too much too soon risks smothering the economic recovery currently underway.

The President's budget would also take steps to fix one of the biggest fiscal mistakes of the past decade - the unpaid for tax breaks for the highest income earners that have significantly increased the budget deficit and national debt to historic highs. The budget proposal saves $750 billion over 10 years on the tax side of the budget by narrowing tax subsidies provided to oil and gas industries, multi-national corporations that maintain tax shelters overseas, and high-income households that receive more economic benefit than other Americans for the same tax breaks.

Rightfully, the budget allows most of the 2001-2003 tax cuts, which primarily benefited the highest income earners, to expire on schedule by the end of the year. To allow them to continue would cost $678 billion over ten years, plus interest. At the same time, the President proposes significant investments in low- and middle-income Americans by extending key tax improvements made in ARRA, such as the Child Tax Credit for 167,000 Arkansas families and the Making Work Pay Tax Credit for one million Arkansas families. These and other similar investments will be critical to reviving the middle-class.

The President does propose a three year freeze on discretionary spending and decreasing funding for lower priority programs. However, the budget would increase funding and make critical investments that are key to the education, health, and well being of Arkansas children and our state's future. Among the investments in children that would see increases: Education initiatives such as Race to the Top and early childhood programs such as child care, Head Start, Early Head Start, and the Early Learning Challenge Fund. The increase in child care alone would provide a $65.4 million dollar boost to our state's economy. These investments would have a significant impact on Arkansas, which has a disproportionately high share of low-income children.

Rising health care costs are the most significant driver of costs and fiscal imbalance. Although health reform is stalled in Congress, the President's budget acknowledges the passage of health reform by incorporating $150 billion in deficit reductions for health reform over 10 years. Without comprehensive reform like the bills already passed by the House and the Senate, health costs will continue to grow much faster than wages. Without reform, many millions of hard-working people and their families will join the ranks of the uninsured and underinsured. And without reform, businesses, staggered by increasing employee health costs, will either drop coverage or will be unable to make needed investments. As a result, our nation's economy- and the ability to create good jobs- will continue to suffer.

Arkansas Advocates for Children and Families applauds the Obama Administrations' fiscal year 2011 budget but acknowledges that even if Congress implements the most aggressive budget targeted towards strengthening the economy and increasing jobs those efforts would be weakened without comprehensive health reform.