October 1, 2014

WASHINGTON BUDGET REPORT: August 11, 2009

WASHINGTON BUDGET REPORT: August 11, 2009
Health Reform: State of Play as Congress Recesses Senate Dems Introduce Statutory PAYGO Without Exemptions CBO Releases Deficit Reduction Options Book Health Reform Side-by-Side Appropriations Tracker

Announcements

Welcome to the Concord Coalition's weekly Washington Budget Report: a nonpartisan plain English summary of key budget, appropriations, and tax developments. The next issue of the WBR will be published when Congress reconvenes the week of September 8, 2009.

The Concord Coalition Washington Budget Report is written and edited by Charles Konigsberg, Chief Budget Counsel of The Concord Coalition. If you have questions or comments about the Washington Budget Report, contact us at ckonigsberg@concordcoalition.org.

The Concord Coalition relies on support from people like you, across the country, who are concerned about our nation's fiscal policy. If you find the Washington Budget Report and our website resources interesting and useful, we invite you to visit http://concordcoalition.org/act/donate and consider making a tax-deductible contribution today in support of The Concord Coalition's work.

You can access Washington Budget Report Archives, going back to January 2007, at http://washingtonbudgetreport.com/archives.php and more recent Reports on the Concord Coalition website at: http://www.concordcoalition.org/publications/budget-report-archive

Budget Process: Step-by-Step

Track 1- Economic Stimulus:

  • January: Congress allows release of the second half of TARP's $700 billion
  • Feb 17: Signed into law by the President (Concord Summary)
  • June 18: Congress enacts $1 billion "cash for clunkers" program in FY 2009 Supplemental
  • August 7: President signed (HR 3435) to extend "cash for clunkers" program w/ an additional $2 billion
  • Current: Track expenditures at www.recovery.gov

Track 2 - Completion of '09 Appropriations:

Track 3 - FY 2010 Budget [SEE APPROPRIATIONS TRACKER BELOW]:

  • February 26: President Obama transmitted a budget outline.
  • March 20: CBO released its Preliminary Analysis of the President's FY 2010 budget (using CBO economic projections)
  • March 25-26: House Budget Comm. and Senate Budget Comm. marked-up their respective versions of the FY 2010 Congressional Budget Resolution.
  • April 29: House and Senate adopted Budget Resolution Conference Report (S.Con.Res. 13).
  • May 11: Administration released remaining details of President's FY 2010 Budget
  • May-Sept: Action on the 12 regular FY 2010 appropriations bills beginning with the House and Senate Appropriations Committees dividing their respective budget resolution allocations among their 12 subcommittees (known as 302(b) allocations -- see Appropriations Tracker, below)
  • August 17: Anticipated release date of Administration's FY 2010 Mid-Session Review
  • August 25: Anticipated release of CBO's August Update
  • October 15: Budget Resolution deadline for committees to report budget reconciliation legislation (health care reform and student loan reform), although congressional leaders will initially try to move a free-standing health reform bill without budget reconciliation's filibuster-proof protections.

Track 4 - Stabilizing the Financial, Housing, and Auto Sectors (Ongoing)

Track 5 - Health Care Reform [SEE HEALTH REFORM SIDE-BY-SIDE BELOW]:

  • March 5: White House Summit on Health Reform
  • May 11: White House meeting with Key Stakeholder Groups
  • July 15: Senate HELP Committee completed mark-up of a health care reform bill.
  • July 17: Ed & Labor Committee marked up and passed its portion of the House Tri-Committee health reform bill
  • July 17: Ways & Means Committee marked up and passed its portion of the House Tri-Committee health reform bill
  • July 17: CBO released cost estimate on House Tri-committee bill estimating a deficit increase of $239 billion.
  • July 31: Energy and Commerce passed modified version of Tri-Committee health reform
  • Oct. 15: Budget Resolution deadline for committees to report budget reconciliation legislation including health care reform (although congressional committees are first attempting to move free-standing health reform legislation without budget reconciliation's filibuster-proof protections.) The advantage of Reconciliation is its immunity from filibuster; the disadvantage is that bill opponents could use the "Byrd Rule" to strip out all "non-budgetary" policy provisions.

Track 6 - Climate Change - Energy

  • May 21: House Energy & Commerce Committee passed the Waxman-Markey climate change bill, approving the measure on a nearly party-line vote (33-25). The bill would mandate a 17% reduction in greenhouse gas emissions by 2020 and 83% by 2050. To accomplish this, the government would set a cap on the amount of carbon dioxide that could be emitted and would issue allowances to polluting sectors that could buy and sell those rights ("cap-and-trade").
  • June 6: CBO says Waxman-Markey climate bill (HR 2454) would reduce the federal deficit $24 billion over 2010-2019. CBO Report
  • June 17: Senate Energy Committee passed 15-8 a controversial energy bill opposed by many environmental groups Press Release Bill Summary Opposition from Environmental Groups
  • June 26: CBO estimates that the revised Waxman-Markey climate bill (HR 2998) would reduce the federal deficit $9 billion over 2010-2019 (increase revenues from "cap-and-trade" by $873 billion and increase direct (mandatory) spending $864 billion). CBO Report
  • June 26: House narrowly passes Waxman-Markey climate change bill 219-212
  • Senate EPW Chairman Barbara Boxer (D-CA) is aiming for a September mark-up of legislation.
  • The Administration wants a bill passed before U.N. climate change talks in Denmark in December.

Track 7 - Highway Bill (FY 2010-15)


  • September 2008: Due to a shortfall in Highway Trust Fund revenues, Congress passed PL 110-318, providing an $8.017 billion transfer from the Treasury's general fund to the HTF.
  • Highway Bill.--Leaders of key congressional committees have been negotiating the parameters of the next multiyear highway bill for fiscal years 2010-2015. However, the Obama Administration has signaled an interest in putting off consideration of a multiyear highway bill due to cost issues -- opting instead for an 18-month extension of current law--but even that will require finding $20 billion in revenues, since the federal gas tax is generating insufficient revenues to fund highway programs.
  • February 2009: Sweeping reforms proposed by the National Surface Transportation Infrastructure Financing Commission
  • August 7, 2009: President signed legislation (HR 3357) to transfer $7 billion from the general fund to the Highway Trust Fund to keep it solvent through September 30, when the current Highway Bill expires.
  • Background.--For the period covered by the budget resolution (2010-2014), Congress allocated $259 billion to the relevant House and Senate Committees for highway and transit spending. This amount reflects a $67 billion increase above the "baseline" level--which is tied to current highway spending.

Track 8 - Enacting Statutory PAYGO

Track 9 - Higher Education Reform

  • July 15: House Education and Labor Chairman George Miller (D-CA) introduced legislation (HR 3221) to convert Federal Family Education Loans (otherwise known as guaranteed student loans) to direct government loans. The budget savings from the student loan reforms would be used to convert Pell Grants into an entitlement program with automatic inflation adjustments.
  • July 21: House Education & Labor Committee voted to report HR 3221 to convert all federally subsidized student loans into direct government loans; the bill can move forward either as a free-standing bill or as a filibuster-proof reconciliation bill
  • July 24: CBO Cost Estimate for HR 3221
  • CBO, July 2009: Analysis of the Subsidy Costs of Direct and Guaranteed Student Loans
  • Oct. 15: Budget Resolution deadline for committees to report budget reconciliation legislation including student loan and Pell Grant reforms (although congressional committees are first attempting to move free-standing reform legislation without budget reconciliation's filibuster-proof protections.)

Track 10 - Long-Term Deficit Reduction

Health Reform: State of Play as Congress Recesses

 

  • HOUSE: With the House now in recess for the month of August, House Democrats are working to reconcile differences among the three versions of the "tri-committee" health reform bill passed by the Ways & Means, Education & Labor, and Energy & Commerce Committees.


  • SENATE: The Finance Committee "Gang of Six" --Democrats Max Baucus (MT), Kent Conrad (ND), and Jeff Bingaman (NM), and Republicans Chuck Grassley (IA), Mike Enzi (WY), and Olympia Snowe (ME)--are continuing to negotiate during the August recess in an attempt to develop a bipartisan bill by September 15. While Republicans in the group reject a September 15 deadline, Baucus needs to aim for mid-September to leave sufficient time to develop a "budget reconciliation" bill in case the bipartisan effort fails. To achieve success, the negotiators need to develop a plan that will garner 60 votes in the Senate, to overcome an expected filibuster by bill opponents. Democrats have 60 votes in the Senate--when independents Joe Lieberman (CT) and Bernie Sanders (VT) are counted--but Senators Ted Kennedy (MA) and Robert Byrd (WV) may not be able to be present for key votes due to illness.


  • The Reconciliation Fallback : Looming ever-closer is the October 15, 2009 deadline for congressional committees to utilize the budget reconciliation process that would allow them to fast-track a filibuster-proof health care reform bill through Congress. Four scenarios could lead to the use of budget reconciliation: (1) House Democrats are unable to successfully merge the 3 bills reported by Ways & Means, Energy & Commerce, and Education & Labor; (2) The Senate Finance Committee bipartisan "Gang of Six" is unable to reach consensus; a (3) Senate Democrats are unable to merge the product of the Finance Committee Gang of Six and the HELP Committee bill; or (4) House Progressive Caucus Democrats are unable to sign on to a bipartisan bill agreed to in the Senate. If the Reconciliation mechanism is used, health reform will become a Democrats-only bill with leadership struggling to achieve 218 votes in the House and 50 votes in the Senate (similar to the Budget Reconciliation bill of 1993).

    • In general, the advantages of Reconciliation are its immunity from filibuster and an effective prohibition on deficit spending during the "budget window" and in the "outyears." (The reconciliation instructions require the bill to save money during the budget window; and the "Byrd Rule" strictly prohibits provisions that would cause deficits beyond the budget window.)

    • The chief disadvantage of Reconciliation is that bill opponents could use the "Byrd Rule" to strip out all "non-budgetary" policy provisions, even if they are aimed at cost savings but lack a definitive budgetary "score."

  • Outyear Deficits for House Health Reform Bill? Senate Budget Committee Republican staff have released an estimate for the House Tri-Committee health reform bill projecting $1.2 trillion in additional deficits for the second 10 years (2020-2029). This follows a CBO letter on July 26 stating that "relative to current law, the (House Tri-Committee health reform bill) would probably generate substantial increases in federal budget deficits during the decade beyond the current 10-year budget window." (emphasis added) If these estimates are correct, this is a matter of great concern. Projected budget deficits are already posing tremendous risks for the health and stability of the U.S. economy. Congress and the Administration must not make a bad situation worse. Policymakers should carefully examine the CBO and Senate Budget Committee projections. Senate Budget Committee Republican staff projections


  • Keeping the Debate Focused and Fact-Based: As the health reform debate continues, it is vital that the debate remain focused on reducing the unsustainable growth in health care spending and improving cost effective access to health care. These objectives have been muddled in recent days by widespread hyperbole and misinformation. USA Today ran an editorial--worth reading--entitled "Misinformation, mayhem mar debate on health care." The Concord Coalition will do our part to keep the debate sharply focused on bringing health care expenditures under control.

Senate Dems Introduce Statutory PAYGO Without Exemptions

Prior to adjourning for the August recess, eight Senate Democrats, led by Senators Claire McCaskill (D-MO) and Michael Bennet (D-CO), introduced legislation to re-establish a statutory PAYGO requirment.

Similar to the bill that passed the House on July 22, 2009 (HR 2920) the Senate bill would require that legislation creating or expanding mandatory spending (entitlement) programs or reducing revenues must be fully offset with spending cuts or revenue increases.

However, unlike the House bill, the new Senate bill would not exempt four costly items from the PAYGO requirement: (1) extending the middle class tax cuts scheduled to expire in 2010; (2) keeping the AMT from impacting middle class taxpayers; (3) holding the estate tax at its current (2009) rate; and (4) preventing scheduled cuts in Medicare payments to physicians. Senate Budget Chairman Kent Conrad has withheld endorsement of the House bill due to the exemptions.

HR 2920 passed the House on July 22, 2009 by a mostly party-line vote of 265-166. In general, Democrats supported the bill arguing it would keep current deficit projections from getting worse. Republicans generally opposed the bill arguing it wouldn't do anything to improve the high deficits already facing the nation.

President's PAYGO Announcement at the White House (C-SPAN)

 

Concord Coalition Issue Brief on Administration Proposal

CBO Analysis of HR 2920

Bill Text as Passed by the House

McCaskill-Bennet Press Release

CBO Releases Deficit Reduction Options Book

Every other year, CBO releases a budget options book that includes a broad array of deficit reduction options. For this publication cycle, CBO released the options in two volumes: (1) last December, CBO released a 221-page options book on Health Care Options; and (2) last week, CBO released a 284-page Budget Options "Volume 2" including other (non-health) spending and revenue options.

Following is a sampling of deficit reduction options included in the new volume (presented for informational purposes and not intended to indicate an endorsement):

Note: Unless otherwise noted, all numbers refer to budget savings over fiscal years 2010-19

  • Cancel the Army's Future Combat Systems program saving $25 billion
  • Scale back the Defense Department's F-35 Joint Strike Fighter program which has a 2010-2034 estimated cost of $254 billion for 2400 planes
  • Scale back long-term development of ballistic missile defense systems saving $49 billion
  • Delay the NASA lunar missions by 5 years, saving $25 billion
  • Eliminate DOE applied research on fossil fuels, saving $9 billion
  • Sell a portion of the TVA's Electric Power Assets, saving $16 billion
  • Increase fees for permits issued by the Army Corps of Engineers, generating $461 million
  • Eliminate subsidies for timber sales, saving $587 million
  • Impose new limits on payments for certain agricultural commodities, saving $1.5 billion
  • Eliminate the Internat'l Trade Administration's trade promotion activities, saving $3.5 billion
  • Limit the federal subsidy for Amtrak, saving $2.1 billion
  • Eliminate air service subsidies to remote communities, saving $1.3 billion
  • Increase fees to cover a larger portion of aviation security expenditures, generating $19.5 billion
  • Prohibit universities from using federal funds to pay for student aid admin. costs, saving $1.9 billion
  • Change inflation adjustment formula for federal, military, veterans' pensions, saving $23 billion
  • Link initial Social Security benefits to the growth in prices instead of wages, saving $195 billion
  • Use an alternative inflation adjustment formula for Social Security benefits, saving $108 billion
  • Raise the 33 and 35 percent income tax rates by 1%, generating $99 billion
  • Use an alternative measure of inflation to index tax rates, generating $90 billion
  • Reduce the maximum mortgage interest deduction from $1.1 million to $500,000, generating $41 billion
  • Tax employer-provided disability insurance, generating $226 billion
  • Tax employer-provided life insurance, generating $25 billion
  • Tax income earned abroad by U.S. citizens, generating $71 billion
  • Treat income for investment management services as ordinary (instead of capital gains) income, generating $25 billion
  • End current-year expensing of oil, gas and mineral industry costs, generating $45 billion
  • Extend the "lifetime" of equipment for purposes of tax depreciation, generating $268 billion
  • Tax all income earned by foreign subsidiaries of U.S. companies, generating $65 billion

Health Reform Side-by-Side

Currently pending are three major health reform measures at various stages of development:

  1. A tri-committee House plan (Ways & Means/Rangel, Energy & Commerce/Waxman, and Education and Labor/Miller).
  2. A Senate HELP Committee Democratic plan (Kennedy-Dodd) was voted out of committee on July 15, 2009. HELP Committee Summary

  3. A Senate Finance Committee bipartisan plan (Baucus/Grassley) is under development. Other participants in the "Gang of Six" are Democratic Senators Kent Conrad (who also chairs the Budget Committee) and Jeff Bingaman; and Republican Senators Olympia Snowe and Mike Enzi (who is ranking Republican on the HELP Committee).

Click here for a Concord Coalition side-by-side comparison of the three major plans

Appropriations Tracker

REVISED House Subcommittee (302(b) Allocations

Senate Subcommittee (302(b) Allocations

**Click on the dates below for links to bill summaries**

 

House

Senate

Bill

Sub.

Comm

Floor

Sub.

Comm

Floor

Agriculture

6/11

6/18

7/9

*

7/7

8/4

CJS

6/4

6/9

6/18

6/24

6/25

 

Defense

7/16

7/22

7/30

 

 

 

Energy-Water

6/25

7/8

7/17

7/8

7/9

7/29

Financial

6/25

7/7

7/16

7/8

7/9

 

Homeland

6/8

6/12

6/24

6/17

6/18

7/9

Interior-Env

6/10

6/18

6/26

6/23

6/25

 

Labor-HHS

7/10

7/17

7/24

7/28

7/30

 

Legislative

6/9

6/12

6/19

*

6/18

7/6

Mil Con-VA

6/16

6/23

7/10

7/6

7/7

 

State-For Op

6/17

6/23

7/9

*

7/9

 

Transp-HUD

7/13

7/17

7/23

7/29

7/30

 


*polled out (no formal subcommittee vote)

 

IN GENERAL.--House Republicans had been attempting to "filibuster by amendment" due to concerns about excessive spending levels, but House Democrats have adopted "modified closed rules" that strictly limit amendments.

Congressional appropriators also face the task of reconciling the President's FY 2010 discretionary funding requests that total $9 billion more than the amount allowed by the FY 2010 congressional budget resolution (see April 30, 2009 WBR). Appropriators will also have to decide whether to accept the $17 billion in program reductions and terminations proposed by the Administration (see May 11, 2009 WBR). Obama Administration's proposed "Terminations, Reductions, and Savings"

EARMARK DISCLOSURE: Earmark lists are available on the House Appropriations subcommittee websites and Senate earmark requests are linked to on the Senate Appropriations website.

IMPORTANT NOTE: Following are LINKS to the latest congressional action, plus a sampling of issues facing the appropriators as reported by Congressional Quarterly and Congress Daily. The numbers in parentheses are the FY 2009 regular appropriations level in billions (not including stimulus funds); the President's FY 2010 request; the House FY 2010 level; and the Senate FY 2010 level.
OMB SAPS: Statements of Administration Policy (SAPS) on the Appropriations Bills are available by clicking here.

1. AGRICULTURE ($21.4 / P-$23.6 / H-$22.9 / S-$24.0) -- Major issues include increasing FDA funding; overhaul of the food safety system; whether to continue a ban on importation of Chinese poultry; a controversial animal identification system that grew out of concerns about mad cow disease; and the President's proposal to end direct payments to farmers with more than $500,000 in annual sales revenue. Summary Table House Bill Summary Senate Bill Summary


2. COMMERCE-JUSTICE-SCIENCE ($57.7 / P-$64.6 / H-64.4 / S-$64.9) -- Major issues include the President's proposed 7% increase over the current year; funds to close Gitmo; a major Southwest Border Initiative; readiness of the Census Bureau for the upcoming census; NASA's post-space shuttle priorities; and a program to help states defray the costs of jailing illegal immigrants convicted of crimes. Summary Table House Bill Summary Senate Bill Summary

3. DEFENSE ($631.9 / P-$640.1 / H-636.3) not including military construction and housing which are funded in the Mil Con-VA bill -- Major issues include terminating the F-22 fighter program which has been plagued with operational problems and cost over-runs; funding for a 2d engine for the F-35 Joint Strike Figher program; funding for the C-17 transport plane, the VH-71 presidential helicopter and the Missile Defense Agency's Kinetic Energy Interceptor--all of which the Administration wants to end; proposed cuts in the Army's Future Combat Systems; and rising personnel costs. (Note: the Administration has threatened to veto the Defense Authorization bills if they authorize further funds for the F-22 or disrupt the F-35 program.) House Bill Summary

4. ENERGY-WATER ($33.2 / P-$34.4 / H-$33.3 / S-$34.3) -- Major issues include how to fund the backlog of Army Corps water infrastructure projects; Defense environmental clean-up; funding for the Administration's "Re-Energyse" proposal (energy innovation centers); how to continue the big boost in renewable energy research after the stimulus bill's funds run out; funds to dispose of weapons grade plutonium under a new agreement with Russia; streamlining approval of new nuclear reactors; and the President's proposal to cut funding for the proposed nuclear waste facility at Yucca Mountain. House Bill Summary Senate Bill Summary

5. FINANCIAL SERVICES-GENERAL GOVT ($22.6 / P-$24.2 / H-$24.15 / S-$24.4) -- Major issues include U.S. policy toward Cuba; education vouchers in the District of Columbia; IRS funding; funding for states to upgrade voting equipment; and a provision requiring GM and Chrysler to reinstitute agreements with certain auto dealerships. Summary Table House Bill Summary Senate Bill Summary

6. HOMELAND SECURITY ($40.0 / P-$42.8 / H-$42.6 / S-$42.9) -- Major issues include funding efforts to find and deport illegal immigrants; whether to further fortify the fence being built along 700 miles of the U.S.-Mexico border; whether to bar release of photos of terrorism detainees; allowing Gitmo detainees into the U.S.; whether the proposal to cut the DHS budget starting in 2012 is realistic; the system for providing federal disaster relief; reorganizing the Federal Protective Service; continuing an "antiquated" Coast Guard navigation system; and increased funding for road and rail security. House Bill Summary Senate Bill Summary

7. INTERIOR-ENVIRONMENT ($27.6 / P-$32.3 / H-$32.3 / S-$32.1) -- Major issues include boosting EPA funding; earmarks for water projects; eliminating a program to clean up diesel engines in California; adequacy of wildfire funding; drilling in federal lands and waters; and new taxes and fees on the oil and gas industry. House Summary Table House Bill Summary Senate Bill Summary

8. LABOR-HHS-EDUCATION ($155 / P-$160.7 / H-$160.6 / S-$163.1) -- Major issues include rejecting the Administration's request to target NIH money at specific diseases; modifications and funding increases for the Pell Grant program; funding for school construction; increased funding for OSHA and LIHEAP; lifting a prohibition on federal funds for needle exchange; and eliminating abstinence-only sex education programs. Summary Table House Bill Summary Senate Bill Summary

9. LEGISLATIVE BRANCH ($4.3 / H-$4.9 / S-$4.5) -- Major issues include creating a fund to pay for renovation of the Capitol and House and Senate office building; and requests for more staffing at CBO and GAO. House Bill Summary Senate Bill Summary

10. MILITARY CONSTRUCTION - VA ($72.9 / P-$77.7 / $H-77.9 / S-$76.7) -- Major issues include advance appropriating FY 2011 funds for VA health care; BRAC funding; housing for trainees; more funds for VA health care for treatment that is not service-connected; and funding for Guard and Reserve initiatives. (Since Jan. 2007, Congress will have increased the baseline for the VA by $20 b, a 58% increase.) House Bill Summary House Summary Table Senate Bill Summary

11. STATE-FOREIGN OPERATIONS ($50.0 / P-$52.0 / H-$48.8 / S-$48.7) -- Major issues include the President's proposed 9% increase for the State Dept. and foreign aid programs; conditions attached to funds for the World Bank and IMF; dropping the "Mexico City" policy that prohibited use of international family planning funds for abortion; funding for Millennium Challenge Corporation (aimed at countries that adopt democratic and free-market policies); and funding for the U.N. Population Fund (which is strongly opposed by anti-abortion groups). House Bill Summary Senate Bill Summary

12. TRANSPORTATION-HUD ($55.0 / P-$108.3 / H-68.8) -- Major issues include how to make up the shortfall in gasoline tax revenues flowing into the highway trust fund; funding for high speed passenger rail and a national infrastructure bank; funding for a new air traffic control system; additional funding for low-income housing rental vouchers; increasing loan guarantees through the FHA; and capital and safety improvements to Washington's metrorail system. House Bill Summary Senate Bill Summary