President Obama and Congressional leaders announced a budget deal late Friday to avert a government shutdown. The outline of the deal is as follows: up to $39 billion in cuts from the 2010 budget, $514 billion in spending for the defense budget covering the remainder of this fiscal year, a GOP agreement to abandon controversial policy riders dealing with Planned Parenthood and the EPA, and an agreement to pass a seventh continuing resolution late Friday night to keep the government operating through next Thursday while the deal is written in bill form. The temporary measure also cuts nearly $2 billion in spending from transportation and housing programs.
Month: April 2011
Federal Shutdown Looms
A Thursday-night meeting between congressional leaders and President Obama failed to resolve an impasse over federal spending that, barring an agreement on Friday, would result in a federal government shutdown. Federal government is currently operating on a continuing resolution (CR) that is set to expire at midnight tonight (Friday, April 8th). If House Republicans and Senate Democrats are unable to reach an agreement on FY11 and no extension of stopgap funding is enacted today, most government operations will have to shut down. The question of whether to include some controversial policy provisions for abortion funding and environmental regulations appears to be the last major hang-up.
The House yesterday passed a one-week CR extension, which would also fully fund the Department of Defense for the remainder of the fiscal year. Republicans argue that their bill, which would keep federal government operating for one week and cut an additional $12 billion in domestic spending, was needed to prevent a shutdown and ensure that US troops would be adequately funded. House Democrats sought to substitute a simple one-week extension – with no policy riders – but were unable to get a vote on their proposal. Senate Democrats have said the bill is a “non-starter” in that chamber and the President said he would veto the measure if it ever reached his desk.
Also yesterday, OMB Director Lew issued guidance to agencies regarding their preparations for a possible shutdown. Lew’s memo details the actions agency heads must take if a shutdown is ordered, including the distribution of furlough notices to “non-excepted” employees (i.e., those who are not considered “essential”). The memo also details certain agency and employee activities that are and are not allowed during the time an agency is not funded. Among the activities that continue will be military actions, customs and border protection activities, core federal law enforcement, air traffic control operations, postal services, and meat and poultry inspection.
Shutdown Looms…
With current stopgap funding expiring tomorrow (Friday) night at midnight, negotiators are in a race against time to reach a deal on FY11 funding. President Obama, Senate Majority Leader Reid, and House Speaker Boehner emerged from a late-night meeting at the White House Wednesday claiming serious progress, but nobody was ready to announce a deal even though they’re only several billion dollars apart in their positions. Negotiators are thought to be talking about spending cuts of between $33 billion and $40 billion, including cuts to both discretionary and mandatory programs.
The House GOP has a back-up plan in place and will take action today by bringing to the floor their one-week continuing resolution (CR) extension, which cuts another $12 billion from domestic spending while fully funding the Defense programs for the year. Democrats oppose the measure, which was introduced on Monday, mostly because of its spending cuts but also because it includes policy provisions that they object to. If a deal on FY11 spending can’t be reached, House passage of the GOP measure would place Senate Democrats and President Obama in the position of causing a government shutdown by either blocking it or vetoing it. Obama earlier this week said he wouldn’t sign any more stopgap measures unless a deal was reached and a “clean” stopgap measure was needed to give Congress time to enact the agreement.
And it may simply be too late to reverse the momentum that has been building toward a shutdown. Speaker Boehner still contends with a caucus eager to show it’s serious about dramatically cutting federal spending, Majority Leader Reid can’t keep going back to his members with an objectionable list of cuts, and Obama wants to avoid giving away the store to Republicans.
Meanwhile, the House Budget Committee reported its budget resolution for FY12, which has sparked an intense debate regarding federal spending and fiscal policy. House Budget approved its FY12 plan last night after a day-long markup in which several Democratic amendments were rejected. Committee Democrats argued that the budget proposal cuts spending for vulnerable populations and key national priorities too deeply while protecting tax cuts for the wealthy, corporations, and oil and gas interests. Rejected amendments included those intended to prevent cuts in areas such as education and Head Start, NIH cancer and other medical research, aid to local police and firefighters, veterans’ programs, food safety activities, and financial regulation and consumer protection.
In addition to assuming fundamental changes to Medicare and Medicaid, the GOP budget calls for overhauling tax policy and creating spending caps and other enforcement mechanisms to reduce the size and scope of federal government. It would cut spending by $6.2 trillion over 10 years compared with Obama’s FY12 proposed budget, and reduce cumulative deficits by $4.4 trillion. It would also cap discretionary spending for FY12 at $1.019 trillion, roughly holding federal spending at FY08 levels.
The budget proposal moves to the House floor for consideration next week, when several substitute budgets will be considered. Democrats will offer their own version of the budget, as will the more conservative arm of the Republican party. Both will likely fall short of votes necessary to replace the current proposal.
Debate Over Energy Bills, Policies Heats Up
The Senate Energy and Natural Resources Committee held a hearing last week to assess hydrokinetic energy as an untapped resource with enormous potential opportunity. Bill S630 regarding Marine and Hydrokinetic Renewable Energy Promotion Act of 2011 was the primary focus of the hearing and if passed would secure funding for research and development of this natural, clean energy resource towards reaching the President’s goal of 33% domestic energy dependency by 2025. Currently, there are no tidal energy facilities within the US, demonstrating a critical need for such a facility. In order for the US to maintain its standing as a world leader in renewable energy, Senator Murkowski (R-AK) had proposed Bill S630 to invest in hydrokinetic energy, as it remains at least twenty years behind wind and solar power in terms of research and development. Witnesses at the hearing also mentioned a proposed increase for higher education student grants in the environmental and marine science fields to contribute to R&D in hydrokinetic tidal power.
Senator Shaheen (D-NH) expressed considerable interest in implementing new hydrokinetic facilities on the coasts of the United States, namely through the supervision of universities or national laboratories, to conduct research and development in this field for renewable energy purposes. Senator Murkowski (R-AK) was also interested in prospective opportunities to secure funding for facility grants by the Department of Energy, as she considers marine hydropower to be the largest untapped source of natural energy in the United States. After construction of an effective hydrokinetic facility, it is projected that power could be generated for 2-4 US cents per kilowatt hour and that 1.4 million jobs could be created in the next 15 years in the field of hydropower in both the public and private sectors. Within the House, Congressman Doc Hastings (R-WA) has set forth several hearings towards an initiative that will speed up developments in offshore oil production as a means of domestic dependence and will consequently create jobs.
Shutdown, FY12, and a Balanced Budget Amendment…
Shutdown Countdown…
Late last night, House Republicans announced that they’re prepared to pass a new one-week continuing resolution (CR) extension with an additional $12 billion in cuts to FY11 unless Democrats “get serious about making real spending cuts on a long-term bill” for the remainder of the year. The two parties have been negotiating over proposed cuts for the year, with Republicans favoring the $61.5 billion in cuts included in HR 1 as passed by the House and Democrats grudgingly agreeing on a $33 billion level of cuts.
The surprise move by Republicans to approve yet another CR is the latest threat to either force action on the FY11 budget or prepare for a government shutdown at the end of this week. Current stopgap funding expires Friday night, and with only a few days remaining it would be very difficult for legislation incorporating any final agreement to be drafted and enacted by that time. The Washington Post reported yesterday that OMB has instructed federal agencies to begin preparing for a possible shutdown. House leaders are also preparing for a government shutdown as they plan to distribute a pamphlet about the mechanics of a partial congressional work-stoppage to all lawmakers’ offices later this morning.
A draft bill being prepared by the House Appropriations Committee last night would fund the Defense Department through the end of FY11 but require $12 billion in new cuts as the price for keeping domestic agencies and the State Department operating another week. The $12 billion is intended as a further down payment toward a final deal, just as $10 billion in cuts were promised under two prior CRs. But Boehner has also raised the ante by demanding total cuts of more than the $33 billion target that was the focus of talks over the weekend.
Senate Democrats will likely oppose the proposed one-week CR extension but if they blocked the measure they could be held responsible for shutting down the government. House Appropriations released a summary of the new one-week stopgap measure, which is designed to appeal to GOP conservatives by providing deeper cuts than prior CR extensions (cutting $12 billion in discretionary spending for the one week, versus $2 billion a week under the last two extensions).
The House Speaker, Senate Majority Leader, and the two House and Senate Appropriations chairmen will meet today at the White House with President Obama and Vice President Biden to try to move negotiations forward – even in light of the House Republican’s new offensive on the FY11 process.
FY12
As if the FY11 process isn’t exciting enough, the House Budget Committee Chair will roll out an FY12 blueprint today that could slash up to $6 trillion in the next 10 years from federal spending, reforms and cuts entitlements, and overhauls sections of the tax code. The Republican budget is expected to include several major proposals: reduction of the corporate tax rate to 25 percent; elimination of corporate tax loopholes; spending cuts with enforceable caps; reforms to “save critical health and retirement programs”; health reform that “repeals and defunds last year’s health reform law,; and a promise to restore “America’s exceptional promise,” according to a draft summary of the budget.
Sources said Ryan plans to lower spending below FY08 levels, a significant cutback but not as dramatic as the previous discussion to cut down to FY06 levels. Other plans include block grants for Medicaid, shifting control to the states. Those on Medicare would get to choose among competing private insurance plans. Additionally, the budget proposal is expected to eliminate funding for the health care law, likely by stopping the expansion of Medicaid and subsidies for private health insurance.
The bill will likely get marked up in committee Wednesday, and the Rules Committee plans to outline the parameters for debate on Tuesday or Wednesday of next week. At that point, the House is expected to pass the resolution and send it to the Senate.
Balanced Budget Amendment
In related news, House Republicans are looking to attract support from enough lawmakers in both parties to move a balanced-budget amendment to the US Constitution in conjunction with coming debates over the budget and the debt limit. The House GOP proposal would require the President to submit a balanced budget, require Congress to enact balanced budgets each year but allow an annual deficit to occur if Congress specifically approves by a three-fifths majority vote of each chamber, and require three-fifths majority votes in order to raise the nation’s statutory debt limit. The measure would allow a waiver of restrictions if the nation is at war or involved in a major military conflict. A constitutional amendment requires two-thirds votes of both chambers, and then must be ratified by at least 38 states.
All 47 Senate Republicans last week joined together to back their own proposed balanced-budget constitutional amendment that also would cap federal spending at 18 percent of gross domestic product. Government spending now stands at about 24 percent of GDP, and has historically run at about 20 percent of GDP. Similar to the House proposal, it would direct the president to submit, and Congress to enact, a balanced budget annually; allow a deficit to occur only by supermajority votes of the House and Senate (a two-thirds vote, versus a three-fifths vote in the House measure); waive the restriction in times of declared war (although a three-fifths vote would be needed to run a deficit when there is a military conflict without a declaration of war); and require three-fifths votes of both chambers to raise the debt limit. The Senate Republican proposal would also require two-thirds votes of both chambers to raise taxes.