Lopsided Approach to Federal Deficit Reduction Would Cost Wisconsin Billions of Dollars

Wednesday, August 8, 2012 at 2:33 PM by

If significant new revenue isn’t included, efforts to reduce federal deficits would almost certainly damage Wisconsin’s economic recovery and future growth by drastically cutting federal investments in schools, roads and bridges, safe communities, and disaster relief.

The House-passed budget from Congressman Paul Ryan is an example of the kind of unbalanced deficit-reduction strategy that does not include revenue. Under Ryan’s plan, Wisconsin would lose an estimated 22%, or $413 million, of its in federal funding for education, clean water, law enforcement, and other state and local services in 2014 alone, according to a report released today by the Center on Budget and Policy Priorities, a non-partisan policy research organization based in Washington, D.C. Ryan’s plan also would shift other very large costs to states by sharply reducing federal funding for Medicaid and likely by making deeps cuts to funding for highway construction and other transportation projects.

Federal funding for states, counties, and cities would be decimated by an unbalanced approach to deficit reduction in the next decade. That’s because there is broad bipartisan agreement that certain big parts of the budget – defense, Medicare, and Social Security – should be spared from major cuts. That leaves federal funding for states and local communities as one of the few remaining sources of large potential savings. Over the eight years from 2011 to 2021, the estimated cuts to Wisconsin are over $3.7 billion.

These cuts would likely bring federal aid to state and local governments to historic lows. By 2021, under the Ryan budget federal grant programs for states, counties, and cities likely would be less than half the average of the last 35 years under the Ryan budget. These cuts would come on top of deep cuts Congress already made to state and local aid last year, and deep cuts Wisconsin has already made in state funding for education and other vital drivers of economic growth, including $792 million in school aids over two years.

The funding cuts to states, counties, and cities under the Ryan budget proposal would far exceed the automatic cuts scheduled to begin in January, often referred to by the term “sequestration.” In 2014, the Ryan budget cuts would be three times as deep as those inflicted by sequestration. In later years, the difference would be even larger. as the sequestration cuts diminish but the Ryan cuts remain just as deep.

The Center on Budget and Policy Priorities report has more information on the detrimental effects of an unbalanced deficit reduction package.

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