On January 1, Congress passed an agreement to avert the “Fiscal Cliff” and prevent tax rates from rising on 98% of Americans.  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 network and the clients we serve. 

Farm Bill

  • Extends the Farm Bill until September 30.
  • No cuts to SNAP benefits, but $110 million was cut from SNAP Nutrition Education
  • 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 anti-hunger advocates like you.  However, deficit reduction politics will continue to dominate Washington.  We can expect significant pressure to cut SNAP and other programs our clients rely on will continue through 2013 as Congress makes decisions on the Farm Bill, federal spending, and deficit reduction.  We will need to be ready for several important events over the next few months and advocacy will continue to be critical.

  • Debt Ceiling vote: Mid-February.  The  Debt Ceiling will need to be increased in mid-February.  This vote may be used as leverage to make sweeping spending cuts.
  • 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.  The threat of sequestration remains another leverage point to make additional spending cuts.
  • 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

Right now, our focus should be on meeting with new Members of Congress and preparing for the upcoming Farm Bill and broader deficit deals.  One thing you can do is join online campaign to get every Member of Congress to visit their food bank.