Category: Budget

The Week Ahead

The House is in at noon today, though no votes are expected.  Eight bills will be considered under suspension of the rules.  House Republicans will try to move forward on a deal to extend the expiring payroll tax cut and could hold a vote this week.  The Senate’s in at 2 pm and will consider the nominations of four judges for district courts in New York, Texas, and Montana.  There will be a vote on one of the nominations; the other three are expected to be confirmed by unanimous consent.  Other than that, both chambers of Congress will continue to work on wrapping up the year’s business before adjourning for the holidays.  The biggest item on the agenda is funding the federal government for FY12.  The current continuing resolution (CR) expires December 16^th.  Appropriators will spend the week working on an omnibus bill with a tentative plan to release a package on December 12^th for a December 15^th vote. 

Appropriations

Appropriators expect to make progress this week on wrapping the nine remaining FY12 appropriations bills into a year-end omnibus package.  Appropriators say that work on many of the remaining appropriations bills is nearly complete and their goal remains to clear the roughly $900 billion package before the current continuing resolution expires December 16^th.  

Payroll Taxes, Unemployment Benefits, and the “Doc Fix”

Lawmakers also want to deal with proposals for extending an expiring payroll tax break, continuing unemployment benefits, and maintaining the current Medicare physician reimbursement rate, all of which are likely to be negotiated into a single legislative package.   The Obama administration is pushing for extending and expanding last year’s payroll tax, with a cost estimate of $120 billion for 12 months, and would pay for it by creating a new surtax on the top-earning Americans.  Senate Republicans blocked that proposal (S 1917) last week.  The GOP then countered with their own plan (S 1931), which called for paying for the break by extending the current pay freeze for federal workers and shrinking the federal civilian workforce through attrition.  That proposal was rejected by Democrats.  Meanwhile, House conservatives are skeptical of any extension.  The White House has indicated it may be willing to negotiate alternative financing, but any offsets would have to satisfy a significant number of Democrats, who will be needed to pass the bill in the House and the Senate.

A plan to block pending cuts to Medicare physician payments due to take effect early next year is also on the table.  This is an issue faced annually by Congress.  House Republicans want to freeze current reimbursement rates for two years at a cost of $38.6 billion, while senators from both parties say a one-year “doc fix” may be more feasible at a lower cost of $21 billion.  A longer fix would buy more time for members to come up with a replacement for the current payment formula, known as the sustainable growth rate (SGR), but Congress would prefer the lower price since it’s not usually offset.

The Office of Federal Relations continues to monitor and weigh in on these issues with our Congressional delegation.  At the same time, we are looking ahead to the FY13 process and how we can best protect major federal research funding.

After a long weekend of negotiations and finger pointing, members of the Joint Select Committee on Deficit Reduction are all but ready to admit failure.  They will continue to work through the day Monday, but it appears unlikely that the eleventh-hour negotiations will yield a budget agreement before the deadline later tonight.  The barriers to success remain the same:  Democrats want more in revenues and Republicans want more in entitlement cuts.  Closed-door negotiations were held throughout the weekend and will continue late into Monday night as the panel seeks to meet its mandate of finding $1.2 trillion in deficit reduction over the next decade, otherwise automatic budget cuts will be triggered. The talks have been stalemated for two weeks, with Republicans unwilling to back any deal that goes beyond $250 billion in new tax revenue and Democrats seeking to prevent entitlement programs from deep cuts.

The panel’s deadline for advancing a proposal is midnight Wednesday, but the bill must be scored by the Congressional Budget Office at least 48 hours in advance of a vote, making today the real deadline.  If no deal is reached, panel leaders are weighing whether to hold a final public session, where each side could present and vote for its own plan, or simply offer a statement saying the effort has failed.  If the panel does come to an accord by some late and remote miracle, Congress would have until December 23^rd to approve the legislative package without any amendments.

Source:  CQ

The House begins work at 10:00 am.  They plan to debate and hold votes in the afternoon on a constitutional balanced budget amendment, and the first minibus appropriations bill for the Departments of Agriculture, Commerce- Justice-Science, and Transportation-HUD.  This measure also contains a new continuing resolution (CR) to extend through December 16^th.  The Senate will also convene at 10:00 am and will consider the FY12 defense authorization bill.  Both chambers had originally planned to be out of session next week for the Thanksgiving holiday, but with the deadline looming for the Joint Deficit Reduction Committee to make their recommendations we expect to see members working through the weekend and into early next week.

FY12 APPROPRIATIONS ENDGAME:  It is becoming clear that appropriators will need to consider a year-end omnibus bill to get the remaining nine of 12 stalled FY12 spending bills enacted.  The leaders of the House Appropriations Committee – including our own Congressman Norm Dicks – expressed a strong desire to finish the FY12 appropriations process before they leave for the year rather than allowing it to spill into 2012.  In order to avoid a year-long CR, Congress will have to clear an omnibus.

JOINT DEFICIT REDUCTION COMMITTEE:  Negotiations over a deficit reduction agreement seemed near an impasse yesterday, with few signs that a partisan gap over raising tax revenue and cutting entitlements could be bridged.   Time is running out for the committee, which must present a plan to cut the deficit by at least $1.2 trillion by November 23^rd or automatic spending cuts will be triggered (to take effect in 2013).   Realistically, the panel would need to have a deal in place this week – or by early Monday morning at the very latest – to meet a requirement that the Congressional Budget Office score it 48 hours in advance of any vote.

The obstacles to success are familiar.  Democrats continue to demand more revenue increases and Republicans are still calling for deeper cuts to health care programs.  One version of “Plan B” would have the committee vote on competing Republican and Democratic proposals, aimed at forcing the other side’s hand.  Republicans, meanwhile, have begun pondering potential fallback plans, including moving legislation that would most likely cut less than $1.2 trillion but softens the blow of the mandated cuts.  There’s even talk of coupling a deficit-reduction package with must-pass measures like unemployment insurance to sweeten the deal for Democrats and President Barack Obama.

The House will vote this week on the final conference report on the FY12 Agriculture, Commerce/Justice/Science (CJS), and Transportation/Housing and Urban Development (THUD) Appropriations bill – also known as the “Mini-bus” (House Report 112-284). The package also contains a Continuing Resolution (CR) to avoid a government shutdown and continue federal operations until December 16, 2011 – or until Congress completes the remaining nine FY12 Appropriations bills. This CR is a “clean” extension and includes no new funding provisions.

Overall Funding Levels– The Conference Report upholds the overall regular (base) discretionary level of $1.043 trillion as agreed to in the Budget Control Act (BCA). The legislation also includes $2.3 billion disaster relief funding, which falls under the “disaster designation” cap set by the BCA.

Continuing Resolution – Funding for all federal programs and agencies not included in the three underlying Appropriations bills in this conference agreement will be extended until December 16, 2011. This is a date-change extension only – no other funding changes are included in the CR portion of the agreement.

Agricultural Research – The conference agreement provides more than $2.5 billion for agricultural research programs, including the Agricultural Research Service and the National Institute of Food and Agriculture. This is a reduction of $53 million from the FY11 level. Highlights include:

• AFRI funded at $264.5 million.
• Hatch Act funded at $264 million.
• Grants for cooperative forestry research funded at $33 million.

Patent and Trademark Office (PTO) – The bill provides $2.7 billion for the PTO – the full requested level. This amount is $588 million, or 28%, above last year’s level. The bill also includes language that allows PTO to keep and use excess fees should actual collections exceed estimates, subject to Congressional approval of spending plans.

National Institute of Standards and Technology (NIST) – NIST is funded at $751 million, including an increase of $33 million above last year to support core NIST scientific research programs that help advance US competitiveness, innovation, and economic growth. In addition, funding for the Manufacturing Extension Partnership program – which provides training and technical assistance to US manufacturers – is maintained at last year’s level of $128 million.

National Oceanic and Atmospheric Administration (NOAA) – The bill provides $4.9 billion for NOAA, which is $306 million (7%) above FY11 and $592 million (-11%) below the President’s request. Within this total, National Weather Service operations are funded at $903 million – $24 million above the current year – and a total of $924 million is included for the Joint Polar Satellite System weather satellite program. The conference agreement does NOT include funding to establish a new NOAA Climate Service. The Administration requested $322 million to establish this new entity within NOAA.

National Aeronautics and Space Administration (NASA) – NASA is funded at $17.8 billion in the conference agreement, which is $648 million below last year’s level and $924 million below the President’s request. Highlights include:

• $5.1 billion for NASA Science programs, which is $155 million above last year’s level. The agreement accommodates cost growth in the James Webb Space Telescope (JWST) by making commensurate reductions in other programs.
• $138.4 million for NASA education research and development activities.
• $40 million for the National Space Grant College program.

National Science Foundation (NSF) – The legislation funds NSF at $7 billion, which is $173 million above last year’s level and $734 million below the President’s request. Within this funding, NSF’s core research program is increased by $155 million to enhance basic research critical to innovation and U.S. economic competitiveness.  The Major Research Equipment and Facilities Construction (MREFC) account is funded at $167.1 million, which is up $50 million from FY11.

Source:  House Rules web page, House Appropriations web page, CQ