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Impact of Fiscal Cliff Agreement on Hunger Relief Network

Impact of Fiscal Cliff Agreement on Hunger Relief Network

Now that Congress has passed an agreement to avert the “Fiscal Cliff” and prevent tax rates from rising on 98% of Americans, you might be wondering, “what’s the impact?”  As part of the deal, the automatic spending cuts (sequestration) that were scheduled to go into effect on January 1 have been postponed for two months. The measure also included an extension of the Farm Bill until September 30 and renewed the Food Donation Tax Deduction through 2013.  Below is a breakdown of how the Fiscal Cliff agreement impacts the hunger relief network and the clients we serve.

Farm Bill

  • Extends the Farm Bill until September 30.
  • No cuts to SNAP benefits (called Food Supplement in Maine; formerly known as Food Stamps).
  • SNAP Nutrition Education was cut by $110 million.
  • TEFAP remains unchanged from previous Farm Bill.
  • Some expired (non nutrition) programs were not funded in the extension.

Tax

  • Reinstates and renews the food donation tax deduction for 2012 and 2013.
  • Leaves deductions including the charitable tax deduction uncapped.
  • Allows the Pease Limitation to be reinstated for incomes above $250,000 single/$300,000 married when taking itemized deductions (The Pease limitation reduces itemized deductions by 3 percent of the amount by which adjusted gross income exceeds a specified threshold, up to a maximum reduction of 80 percent of itemized deductions. Could have an impact on very large strategic gifts, but not nearly as much as capping deductions would have).

What’s Next?

Cuts to anti-hunger programs, as well as limits to the charitable tax deduction, were averted in this agreement, in large measure due to the tremendous advocacy efforts of the national anti-hunger and non-profit communities.  However, deficit reduction conversations will continue to dominate Washingtonm, and we can expect an ongoing debate about whether to cut SNAP and other programs on which our clients rely as Congress makes decisions on the Farm Bill, federal spending, and deficit reduction.

  • Debt Ceiling vote: Mid-February.  The  Debt Ceiling will need to be increased in mid-February.
  • Farm Bill Markup: End of February.  Because there is a new Congress, both the House and Senate will need to rewrite the Farm Bill.  The House has indicated they will markup the Farm Bill on February 27.  The Senate is also expected to act quickly.
  • Sequestration: March.  The automatic spending cuts scheduled to go into effect January 1 were postponed until March.
  • Expiring Continuing Resolution: March. The Continuing Resolution will expire in March, meaning Congress will need to pass legislation to keep the government in operation.

Advocacy

We encourage you to join the conversation about ending hunger in America and providing a safety net for the nation’s most vulerable populations. You might consider reaching out to your Member of Congress to encourage them to visit the Food Bank.