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News and updates

President Obama Annouces $447 Billion American Jobs Act

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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

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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 30th), 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 23rd, 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.

Early Details of Obama’s Jobs Package Released Ahead of Tomorrow’s Speech

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In light of a stalled and bleak economic recovery, President Obama is set to annouce an aggressive “Jobs” proposal in a speech before Congress tomorrow evening.

While officially unconfirmed by the White House, the package apparently contains approximately $300 billion worth of tax credits, school renovation projects, job training for the unemployed, and a program to prevent layoffs of school packages in an effort to jumpstart the economy and put many Americans back to work.

Although Obama has said that the jobs plan will include ideas that Republicans have historically supported, there has already been early skepticism voiced by members of the GOP and even some conservative democrats concerned that this will look too much like another stimulus package.

Appropriations Outlook for Next Week

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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.

Joint Select Committee on Deficit Reduction: Timeline & Deadlines

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Timeline

August 16, 2011:  members of the Joint Select Committee on Deficit Reduction to be appointed.

September 16, 2011:  Joint Select Committee on Deficit Reduction must hold its first meeting.  

September 22, 2011:  Congress must consider a resolution of disapproval for first tranche ($900 billion) of debt limit increase.  

October 1-December 31, 2011:  the House and Senate must vote on a Balanced Budget Amendment.

October 14, 2011:  deadline for House and Senate committees to submit recommendations to the Joint Select Committee on Deficit Reduction.

November 23, 2011:  deadline for the Joint Select Committee on Deficit Reduction to vote on a plan with the goal (not a requirement) of $1.5 trillion in deficit reduction.   

December 2, 2011:  Joint Select Committee must submit report and legislative language to the President and Congress.

December 23, 2011:  Deadline for the House and Senate to vote on the Joint Select Committee on Deficit Reduction’s bill.     

January 15, 2012:  “trigger” date leading to $1.2 trillion of future spending cuts goes into effect, if the Joint Select Committee on Deficit Reduction’s legislation has not been enacted. 

February 2012:  Approximately when the first $900 billion of debt ceiling increase runs out. 

February/March 2012:  in this period—15 days after the President uses his authority under the bill to increase the debt ceiling a second time—is the deadline for Congress to consider a resolution of disapproval for the second tranche ($1.2-$1.5 trillion) of debt limit increase.  

Fall/Winter 2012:  additional $2.1-$2.4 trillion of borrowing authority from this law runs out. 

January 2, 2013:  OMB orders sequestrations for defense and non-defense categories of spending necessary to meet spending cuts required by the “trigger.”