Category: On the Hill

Senate Republicans are posed today to initiate an effort to block automatic budget cuts scheduled to take place next January.  They will propose replacing the first year of the spending “sequester” with a plan to shrink federal employment and extend a pay freeze on government workers.  The effort is an attempt to stave off what many view as potentially devastating cuts to the Pentagon.

Late last year, House Armed Services Chairman McKeon (R-CA) offered a similar proposal (HR 3662) that quickly received a veto threat from the White House.  McKeon’s legislation would save more than $120 billion over a decade, effectively offsetting the first year of the statutory sequester of both defense and non-defense spending. That would push off until FY14 the spending cuts triggered the Budget Control Act (PL 112-25) that was approved by Congress last August.

The Senate’s proposed bill, the Down Payment to Protect National Security Act of 2012, will add credibility to the sequester repeal effort due to the high-profile sponsors of the bill, including Senators Jon Kyl (R-AZ), John McCain (R-AZ), John Cornyn (R-TX), Lindsey Graham (R-SC), and Kelly Ayotte (R-NH).

Like McKeon’s measure, the Senate legislation would replace $109 billion in estimated, across-the-board spending cuts that are set to kick in January 2, 2013 with savings from a reduction in the federal workforce over a decade.  McKeon’s proposal would trim the workforce by 10 percent by replacing every three workers who leave an agency with just one new hire.  The Senate bill would cut the workforce by 5 percent, replacing every three full-time workers who leave with two new hires.  The Senate bill goes farther than the House measure by also finding savings by extending the current pay freeze for federal civilian workers until June 30, 2014.  Contrast that will what is expected to be in the President’s FY13 budget request: a 0.5 percent pay bump for federal employees in his budget proposal due February 13^th, bringing an end to the two-year freeze.

Senator Murray (D-WA) has already expressed her opposition to the GOP plan via Twitter, where she posts “GOP to lay out plan to avoid def. cuts tmw. Who thinks it will also avoid having wealthy pay fair share? Ask only middle class sacrifice?”

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.