On August 2nd President Obama signed the Budget Control Act of 2011 (S. 365) after weeks deliberation that ultimately ended in bipartisan support by the U.S. House of Representatives (269-161) and the U.S. Senate (74-26). The deal will raise the debt ceiling, avoiding a potential federal default with two stages of deficit reduction:
Stage 1: Approximately $1 trillion will be cut from discretionary spending over 10 years.
Stage 2: The bipartisan committee will identify $1.5 trillion in deficit reduction by November 30, 2011. If the committee fails to agree to legislation that decreases the deficit by at least $1.2 trillion or Congress does not execute the recommendation, then across-the-board cuts of $1.2 trillion will be prompted. This would entail cuts for defense and domestic discretionary spending, however, some programs including Medicaid and Social Security would be exempted.
There is no clear indication yet as to how the cuts in spending will affect the housing and community development programs. The United States House of Representatives and Senate will likely use the August recess to discuss the cuts and adjust the allocations for the Transportation, Housing and Urban Development (THUD) subcommittees. More information will be provided in months to follow the agreement.
