|Health Reform: Finance Committee Begins Mark-Up, Changes Bill||Health Reform Side-by-Side||The "Other" Major Budget Bill: Student Loan Reform||Increase in the Debt Ceiling could be a Vehicle for Deficit Reduction Commission||Appropriations Tracker|
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New additions to the following chronologies are in bold type.
Senate Finance Committee yesterday (Tuesday 9/22) began marking up the plan released by Chairman Max Baucus (D-MT) last week, with a significant modification released by Baucus yesterday. While four other congressional committees have already marked up bills--3 committees in the House and the HELP Committee in the Senate--the Finance Committee action is is the most critical health reform markup because the Baucus plan is the only one that meets the President's commitment to not increasing the deficit in the short- or long-term (although we do not yet know what the long-term outlook is in light of Baucus' modification).
Finance Committee is aiming to complete action and report a bill next week after CBO provides a preliminary cost estimate of the bill as amended in committee. A major complicating factor in bringing the measure to the Senate Floor will be the extent to which Senate leaders decide to merge provisions from the Senate HELP (Health, Education, Labor, and Pensions) Committee bill into the Finance Committee bill.
While keeping a close eye on developments in the Senate, House Democrats will have 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.
The House Rules Committee will have to meld the three committee bills together, along with any further amendments adopted by the Energy and Commerce Committee, which will resume its mark-up today (Wednesday, 9/23). The House committees may also have to develop a reconciliation bill by October 15 if the Senate goes that route (see above).
Currently pending are three major health reform measures at various stages of development, as well as a set of principles laid out by the President in addressing Congress on September 9, 2009.
Last week, the House passed a major overhaul of the student loan system that would terminate the Federal Family Education Loan program (otherwise known as guaranteed student loans) and re-direct all loan activity into the direct student loan program. This would result in substantial budgetary savings which would be invested in Pell Grants, lowering borrower interest rates, and other education programs. The bill, HR 3221, passed the House by a vote of 253-71.
Currently, the two programs -- direct student loans and guaranteed student loans (FFELs) -- operate side-by-side. In FY 2009, the guaranteed student loan program administered about $64 billion in loans and the direct student loan program administered about $22 billion in loans. Both programs offer the same varieties of repayment terms and low-interest loans. They differ only with respect to the source of the loan funds--private lenders and the Federal government, respectively. (Since they are loan programs, the actual federal budgetary costs are limited to administrative costs, fees, and anticipated defaults.)
The reform effort began earlier this year with an Obama Administration budget proposal to convert guaranteed student loans to direct government loans. Budget savings would result by effectively removing the middleman from the lending process. The Administration proposed to invest the savings in the Pell Grant Program and other education programs.
Critics of the Administration plan have said the bill would eliminate thousands of jobs in the banking industry, and many have backed an alternative proposal by lending giant Sallie Mae that would preserve the role of private lenders in disbursing loans. However, according to the Congressional Budget Office (CBO), that approach would have netted less in budgetary savings. CBO Analysis
CBO has estimated that the student loan provisions in the House-passed bill would save $89 billion over 10 years. Under the bill, $47 billion over 10 years would be used to increase the availability and amount of Pell grants -- from $5,550 per student in 2010 to $6,900 in 2019. (The bill would also index maximum grant amounts to the Consumer Price Index plus 1 percent.)
The bill would also provide $28 billion over 10 years in new direct spending for a number of education programs, including:
(Background on Pell Grants: While the student loan programs provide the largest volume of student aid, the largest program in terms of federal expenditures is the Pell Grant program which provided grants to more than seven million undergraduates in 2009 at a cost of nearly $25 billion. A majority of Pell Grant funds are annual discretionary appropriations, which are boosted each year by additional mandatory spending. For example, in 2010, the $5,550 Pell Grant is comprised of $4,860 in discretionary spending plus $690 in mandatory spending.)
The House passed HR 3221 as a free-standing bill, but also reserved the right to re-pass the measure as a budget reconciliation bill in the event that filibuster-protection is needed in the Senate. It is also possible that Democrats may use reconciliation to protect health reform from filibuster (see the preceding article), in which case the health reform and student loan bills would be combined into a single reconciliation bill.
Treasury Secretary Timothy Geithner sent letters to congressional leaders on August 7, 2009 notifying them that the current $12.1 trillion "debt ceiling" is likely to be reached this fall (recent indications are that the ceiling will need to be raised in mid-November). While there is no doubt that Congress will raise the debt ceiling -- they must do so as a practical matter -- the action will be a political lightening rod for rhetoric about fiscal responsibility.
Background.--Federal law contains a statutory limit on the Federal debt commonly called the "debt ceiling." One might assume that a mechanism called the "statutory limit on the Federal debt" serves as a form of budgetary restraint or enforcement. However, the debt ceiling does not restrain the growth of Federal debt. Rather than being an instrument of fiscal policy, the debt ceiling is a consequence of fiscal policy.
The debt ceiling applies to gross (total) federal debt--which is the sum of "debt held by the public" and "debt held by government accounts." Gross debt grows for two reasons. First, as a consequence of deficits that occur when Congress approves Federal spending in excess of revenues. Second, gross debt increases because government trust funds are required to invest their surpluses in Treasury securities as a financial safeguard. These include the Social Security, Medicare, Highway, and Civil Service Trust Funds. When trust fund surpluses are invested in Treasury securities, they become available to help finance annual deficits, along with funds borrowed from the public.
The issuance of Treasury securities is not discretionary. As noted above, government trust funds must invest their cash in Treasury securities; and, in the case of annual deficits, once Congress has authorized agencies to enter into spending obligations that exceed federal revenues, the Treasury has no choice but to raise the necessary cash by issuing securities and adding to the accumulated debt.
Nevertheless, a statutory limit on outstanding federal debt has been in effect since 1940, when "debt subject to limit" stood at $43 billion. Congress has increased the debt ceiling 90 times since it was first imposed. Since the increases in the debt must occur in order to fulfill the obligations of the U.S. government and preserve the government's creditworthiness, many observers wonder why we have a statutory ceiling on the debt.
The short answer is that the debt ceiling is a political instrument--not a fiscal policy instrument. Members of Congress concerned about annual deficits and increases in the accumulated debt have historically only been willing to increase the debt in relatively small increments to be certain that every time the debt ceiling is reached a fiscal policy debate will take place. (Unfortunately, it also allows the more cynical members of Congress to feign "fiscal responsibility" by voting against authorizing more debt, without making the difficult spending and tax decisions required to balance the budget.)
Debt Ceiling as a Vehicle for Deficit Reduction Commission.--Since increasing the debt ceiling is "must-pass" legislation (because the Treasury must have the ability to raise cash to fulfill U.S. government obligations), the debt ceiling has often served as an attractive legislative vehicle to which Members of Congress can attach legislation--especially bills pertaining to the budget. For example, this year's debt ceiling increase could be the vehicle for establishing a bipartisan national deficit reduction commission.
With the new fiscal year beginning October 1, 2009, it appears that only a few appropriations bills will make their way through House-Senate conference and to the President's desk on time. (The five bills that have passed both chambers and are being conferenced are: Agriculture; Energy-Water; Homeland Security; Legislative Branch; and Transportation-HUD. The Senate is currently considering the Interior-Environment appropriations bill.) In order to keep the federal government operating, Congress will need to pass a "continuing resolution" that keeps agencies funded into October (usually at the lower of House-passed, Senate-passed, or last year's spending levels).
Increases over 2009 Spending: According to a Congressiona Quarterly analysis, Congress plans to spend $75 billion or 7 percent more in FY 2010 than they did in FY 2009 on the 12 annual discretionary spending bills.
REVISED House Subcommittee (302(b) Allocations (among the 12 appropriations subcommittees)
Senate Subcommittee (302(b) Allocations (among the 12 appropriations subcommittees)
Click on the dates below for links to bill summaries. If you have trouble with the Senate links download the most recent version of Adobe Acrobat Reader or go to http://appropriations.senate.gov/ and click on "Subcommittees" for links to the documents.
|6/18||6/24||6/25 || |
|7/16 ||7/22||7/30 ||9/09||9/10|| |
|6/25 ||7/8 ||7/17||7/8 ||7/9 ||7/29|| |
|6/25 ||7/7 ||7/16 ||7/8 ||7/9 || |
|6/10||6/18||6/26 ||6/23 ||6/25 || |
|7/10||7/17||7/24 ||7/28||7/30 || |
|6/18||7/6 || |
|6/16||6/23 ||7/10 ||7/6||7/7 || |
|7/9 || |
|7/17 ||7/23 ||7/30 || |
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.
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 / S-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 Senate 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 Report
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-$68.9 / H-$68.8 / S-$67.7) -- 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
Links to Finance Committee health reform bill (see lead article above)
America's Priorities (new edition to be released by the Concord Coalition in fall 2009)