The failure of the Super Committee to meet its $1.2 trillion deficit cut target by its deadline this week could have strong implications for the government bodies that oversee the Home Equity Conversion Mortgage program. Whether those implications will ever become reality is another story.
For now, the Federal Housing Administration and Department of Housing and Urban Development will operate under business-as-usual, a White House representative told RMD. The cuts, which are not scheduled to kick in until 2013, depend largely on the coming 2012 election and a number of other factors in between.
“There is more than a year for Congress to do its job, which we expect to include balanced deficit reduction at least equal to what the Supercommitte was charged to accomplish,” a White House Office of Management and Budget spokeswoman told RMD. “Congress can still act to avoid the sequester, and we expect them to live up to their responsibility and do so.”
If the law does not change, OMB says, funds across defense and non-defense programs will be sequestered in 2013, with some exceptions.
“In the meantime, government operations for this fiscal year continue as normal. When appropriate, OMB will take necessary steps to ensure that if there is a sequester, the government is prepared for it.”
A sweeping across-the-board cut is what all government departments could face, assuming another alternative is not met before the 2013 sequester. The specifics, however, are still to be determined.
“Details for what this will mean for each program and department have not yet been determined,” OMB said.
Whether those programs and departments will actually face the Congressional chopping block is another story.
“The cuts that actually kick in 2013 will depend entirely on the 2012 election,” said Dean Baker, co-founder of Washington, D.C.-based Center for Economic and Policy Research. “If the president and congress elected in 2012 opt for a different patterns of cuts or possibly putting off cuts, then this is what we will see. A future congress cannot be bound by the decisions of a prior congress.”
If the cuts do become reality, Baker says, FHA stands to face a 15% reduction. It would then decide how to allocate that among its various priorities, he said.
Written by Elizabeth Ecker