Federal Relations

July 12, 2011

Debt and Appropriations Update

Debt Negotiations Continue:  Congressional leaders will meet with President Obama at the White House again today as both sides show no sign of softening their positions.  Obama has increased the pressure on Congressional leaders to reach a deal in the coming weeks by stating that he would not agree to any short-term measures.  The President emphasized that he was willing to compromise, saying that both Republicans and Democrats should do the same to strike a deal now.  Prospects for a comprehensive $4 trillion deficit reduction package fell apart over the weekend with Republicans saying they would not accept any tax increases, while Democrats continue to hold out against cutting entitlements.  At yesterday’s White House meeting, leaders focused on about $1.7 billion in spending cuts that had been identified in the earlier talks led by Vice President Biden. 

House Appropriations Schedule Slows Down:  With a crucial House Appropriations subcommittee markup delayed this week, plans to move all 12 spending bills out of committee before August recess may be in jeopardy.  House appropriators have scrapped a subcommittee markup of the FY12 Transportation-HUD spending bill set for Thursday.  The committee says the delay is due to scheduling issues, but the cancellation is likely tied to the ongoing deficit reduction negotiations.  The Transportation-HUD measure is slated for some of the largest cuts (13.9 percent) as part of an effort to cut $30 billion in overall FY12 spending.  GOP leaders, however, may want some room to maneuver as negotiations continue over a deficit reduction deal.  The deficit agreement is certain to mandate domestic cuts over the next decade and Republicans may not want to lock in FY12 spending plans until they know the extent of those reductions.  By the end of the week, the panel is expected to have approved nine of its 12 spending bills.  Markups of the Legislative Branch and Commerce-Justice-Science spending bills are set for Wednesday.  The three remaining bills — Transportation-HUD, State-Foreign Operations, and Labor-HHS-ED — account for the bulk of the spending cuts sought by Republicans and those have not yet moved through their subcommittees, and likely won’t until after the August recess period.