FY12 Appropriations Update

Posted on September 12, 2011October 17, 2012

With the end of the federal fiscal year looming, congressional leaders are drafting a continuing resolution (CR) for FY12 in order to avoid a government shutdown when the fiscal year ends on September 30^th. The CR is expected to run through November 18th, and would set spending levels at those agreed to in debt limit legislation agreed to last month (PL 112-25). Both House and Senate leaders want to pass the bill the week of September 19^th in order to go ahead with plans for a scheduled recess the last week of September.

To date, no stand-alone spending bills for FY12 have been approved. The House has no plans to take up appropriations measures this week. The Senate, however, hopes to move four of their bills through committee this week: Commerce-Justice-Science, Defense, Legislative Branch, and Financial Services. The Senate bills are expected to include some significant differences in comparison to the House bills and administration proposals, in both overall funding levels and spending priorities.

President Obama Annouces $447 Billion American Jobs Act

Posted on September 9, 2011October 17, 2012

Last night in a joint address to Congress, President Obama laid forth a $447 billion plan designed to put Americans back to work and jumpstart the struggling economy. The proposed package includes $245 billion in tax cuts, $140 billion in investments in infrastructure and local aid, and $62 billion in continued unemployment benefits. To ensure that the American Jobs Act is fully paid for, the President stated that he would call on the Joint Committee to come up with additional deficit reduction necessary to pay for the act and still meet its deficit target. It is expected that President Obama will release a more detailed plan in the coming days. Here is what we know of the plan at this point:

Tax Cuts
– The President’s plan will cut in half the taxes paid by businesses on their first $5 million in payroll
– An Employer payroll tax holiday for added workers or increased wages
– Tax credit to employers for hiring long-term unemployed workers
– “Returning Heroes” hiring tax credit for veterans

Infrastructure and Local Aid
– Prevent up to 280,000 teacher layoffs, keep cops and firefighters working
– Modernize approximately 35,000 public schools around the country by investing $25 billion that will create jobs, improve classrooms, and upgrade schools
– An immediate investment in roads, railroads, and airports to help modernize the nation’s infrastructure, put construction workers back on the job, invest in NextGen Air Traffic Modernization efforts
– Expand access to high-speed wireless, especially in remote rural areas

Unemployment
– Ensure that 6 million people do not use unemployment insurance
– Expand job opportunities for low-income youth and adults

We will have further analysis on the details of this proposed package as more information is released from the White House in the coming days.

Congress Back in Session

Posted on September 7, 2011October 17, 2012

Congress returns to work this week after a long August recess period. Appropriations measures will move quickly over the next few weeks, and the deficit reduction committee will begin their work. Adding to an already busy first week back, President Obama is scheduled to release a new jobs package during an address to a joint session of Congress tomorrow night. Check back frequently for updates.

FY12 Appropriations Process Continues: With lawmakers focused on the new joint deficit committee and long-term spending cuts, House and Senate appropriators are pressing to wrap up the FY12 spending process as quickly as possible though some partisan clashes are still likely. House appropriators are set to advance two bills this week that have yet to see action in that chamber – Transportation-HUD and Labor-HHS-Education.

Meanwhile, the Senate will begin long-delayed markups and formally set appropriations allocations. With the end of the federal fiscal year quickly approaching (September 30^th), a continuing resolution is almost certain to be needed and many insiders are hoping to avoid a repeat of the showdown over FY11 spending that took place earlier this year. A senior House Appropriations aide said Tuesday that lawmakers will strive to complete the FY12 budget process before November 23^rd, when the debt reduction committee is required to submit a plan for trimming the deficit by $1.5 trillion.

Senate appropriators will approve appropriations allocations and advance Agriculture, Energy-Water, and Homeland Security bills today. The spending allocation levels in the Senate are expected to differ significantly from the numbers approved in the House, reflecting both the increased overall spending level agreed to in the debt limit agreement (PL 112-25) and different priorities between the Democratic-controlled Senate and Republican-controlled House.

Meanwhile, the House Appropriations Committee is moving forward with its remaining bills, announcing Tuesday that it will mark up the Transportation-HUD bill on Thursday and the Labor-HHS-Education bill Friday.

Deficit Reduction Committee Begins Work: With the bipartisan panel set to hold its first meeting Thursday, some spending cuts proposed earlier this year could gain momentum and a perennial Pentagon target could once again be on the chopping block. A starting point for the panel could be the recommendations of a bipartisan group of negotiators led by Vice President Biden, which identified hundreds of billions of dollars worth of potential reductions in the deficit on the mandatory side of the federal budget earlier this year. The committee also may draw on the work of the Senate’s “Gang of Six” and on the recommendations made late last year by the President’s debt commission.

Staff for members of the super committee met yesterday to discuss options for moving forward with their charge to cut $1.2 trillion from expected federal deficits over the next decade. Sources say that the super committee is close to finishing up a package of rules governing its activities. In addition to the rules laid down in the law creating the super committee, the panel is trying to blend House and Senate committee rules to come up with a formula that works for the overall group.

It is predicted that the super committee will recommend some cuts but not enough to prevent the automatic across-the-board reductions. It’s important to remember that the debt bill requires automatic cuts imposed by a trigger, which are based on the difference between the goal and what the committee, Congress, and the President agree to. If the committee comes up with nothing, the automatic cuts are based on $1.2 trillion. If the committee can get $1.2 trillion through Congress and the President, then there are no automatic cuts. But rather than making it an all-or-nothing equation, the framers of the bill allowed for a hybrid. If, say, the committee can agree to $500 billion in deficit reduction, the automatic sequestration is based on $700 billion – or the difference between $1.2 trillion and the $500 billion all sides agreed to.

Presidential Address Thursday Night: President Obama will address a joint session of Congress on Thursday evening to unveil his new jobs package. Early indications are that this package will attempt to lift the ailing economy through $300 billion worth of tax credits, school renovation projects, job training for the unemployed, and a program to prevent teacher layoffs. All of this could help state governments that are continuing to make serious cuts in education and health services. In his speech, Obama may also ask lawmakers to renew the 2 percent payroll tax cut that was approved in December and to extend jobless benefits. More details will be posted here after this package is released.

Appropriations Outlook for Next Week

Posted on August 31, 2011October 17, 2012

The Association of American Universities (AAU) released the following outlook today for the appropriations process scheduled to resume next week when congress returns from recess:

The Senate Appropriations Committee will begin moving its FY12 bills next week as soon as the Senate returns from the August recess on September 6. Two bills will be marked up that day in their respective subcommittees: Energy and Water and Homeland Security. CQ Today reports that the full committee is expected to meet shortly after the subcommittee markups to adopt the FY12 spending cap and allocate funding among the panel’s 12 subcommittees. Just one funding bill, Military Construction-Veterans, was approved by the Senate before the recess.

Senate Democratic leaders delayed approval of an FY12 budget resolution, which sets the discretionary spending ceiling for the fiscal year, because they could not gain majority support for any particular level of spending. The issue was resolved on August 2 with enactment of the Budget Control Act, which included a discretionary spending total of $1.043 trillion for FY12. That is $7 billion less than the FY11 level, but about $23 billion more than the level in the House-passed FY12 budget resolution.

Earlier this year, the House passed an FY12 Budget Resolution that cut $30 billion from discretionary spending in FY11, and then approved six of its 12 appropriations bills based on those numbers. The remaining bills include Commerce-Justice-Science, which funds the National Science Foundation and NASA, and Labor-HHS-Education, which funds the National Institutes of Health and student aid.

At this writing, House Republican leaders have not said how they will move forward on the remaining FY12 bills in light of the increased spending total, but they have expressed support for abiding by the higher overall number. House Majority Leader Eric Cantor (R-VA), said in a memorandum to his Republican colleagues on August 17, “While all of us would like to have seen a lower discretionary appropriations ceiling for the upcoming fiscal year, the debt limit agreement did set a level of spending that is a real cut from the current year level. I believe it is in our interest to enact into law full-year bills at this new lower level.” House Appropriations Committee Chairman Hal Rogers (R-KY) stated his commitment to maintaining “the responsible 2012 spending level agreed to by the House, Senate, and White House under the recent debt ceiling agreement.”

While the Senate appropriations process is finally moving forward, the new fiscal year is just one month away, so there seems little chance that the House and Senate can approve all of their bills and reconcile them with one another by October 1. The more likely scenario is congressional approval of one or more continuing resolutions to sustain funding into the new fiscal year, followed by some type of omnibus appropriations package.

Debt Deal Done!

Posted on August 2, 2011October 17, 2012

The House approved the deficit reduction bill last night by a vote of 269-161; 95 Democrats and 66 Republicans voted against the measure. Congressmen Adam Smith and Jim McDermott voted no, while the remaining members of our delegation voted in favor of the bill. The Senate is expected to clear deficit reduction legislation at noon today. And while it is not on the President’s schedule for today, he is largely expected to sign the bill before the close of business. With his signature, a six-month-long battle over raising the debt ceiling ends but the next round begins with future fights over spending, taxes, and entitlement programs.

With that vote, the House went into recess last night and is not expected back in DC until after Labor Day. The Senate will join their House colleagues once they conclude their vote.

As I reported yesterday, the legislation would cap discretionary spending for FY12 and FY13, effectively freezing it at current levels and only adjusting it to match historical levels of inflation (2.2 percent) through 2021. It would also create a joint congressional committee tasked with finding between $1.2 trillion and $1.5 trillion in new savings, and sending a proposal to the House and Senate floor for guaranteed votes by December 23^rd. If those savings are not enacted, sweeping automatic budget cuts would be triggered.

Democrats are hopeful that the debt limit deal might generate more spending for domestic programs, while Republicans are concerned about cuts in defense. The allocations would reverse cuts set in April by the House Republicans’ budget target, which would have lopped $30 billion from discretionary spending compared with FY11. The Labor-HHS-Education and Transportation-HUD bills had been set to include the majority of those cuts and have yet to be unveiled in the House. The extra funds could ease the path of those bills when they are marked up in September. With an allocation to work from, Senate appropriators also hope to begin moving bills, which are almost certain to differ from their House-passed counterparts.