House Debt Vote Delayed

Posted on July 29, 2011October 17, 2012

House Republicans leaders were left scrambling to rewrite deficit reduction legislation after a widely anticipated vote on the proposal was canceled late Thursday. The vote on the debt limit and deficit reduction plan could come today (Friday) if the House Speaker is able to modify his bill enough to garner the votes he needs for passage. However, it is not clear what revisions would be made to the plan that would be acceptable to the most conservative members of the House. House leadership had expected narrow passage of the bill, which would cut spending by $917 billion over 10 years, mostly through discretionary spending caps, and raise the debt ceiling by $900 billion. It would also link a second, $1.6 trillion debt limit increase to the enactment of another $1.8 trillion in deficit reduction. House conservatives have criticized the measure for not seeking deeper cuts and not mandating a balanced-budget amendment to the Constitution.

The Senate had planned to reject the measure after the House passed it Thursday, a move that was expected to clear the way for negotiations on a final package. Without an agreement in place to raise it, the federal government will go into default. To forge a deal that can clear Congress, negotiators will need to find a middle ground that meets each party’s basic needs. It will need to reduce the deficit by at least as much as it increases the debt limit, without raising taxes, in order to be acceptable to the House’s Republican majority. And to appeal to Democratic votes, it will have to raise the debt limit enough to allow government borrowing through 2012 — and leave entitlement programs alone.

Negotiators are increasingly focused on the chief difference in the plan: when and how to raise the debt ceiling. Republicans want a second installment of a proposed $2.5 trillion increase conditioned on another deficit reduction measure being signed into law sometime next year. But Democrats worry that would lead to another debt ceiling standoff if the plan does not clear Congress – a VERY likely scenario. A compromise being promoted by Democrats would eliminate the conditional debt increase and instead put in place a fiscal enforcement mechanism, or a trigger, that would force tax increases or spending cuts, or a combination of both, if deficit reduction goals are not met. The triggers would be modeled after similar mechanisms used in the 1985-90 Gramm-Rudman deficit reduction plan that required across-the-board spending cuts if the limits were breached.

Meanwhile, the Treasury Department says the current $14.3 billion borrowing limit will be hit August 2^nd (some say the “real” date is actually August 4^th). The Treasury plans to release information on their contingency plan after the financial markets close today (Friday).

Senate Holds Hearing on Department of Ed FY12 Budget

Posted on July 28, 2011October 17, 2012

The Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies held a hearing yesterday on the Department of Education’s FY12 budget. Secretary Duncan was the witness.

In his opening remarks, Duncan expressed concern that America has gone from being a world leader in education to now being “middle of the pack”. He also emphasized that demand on the Pell program has increased from 6 million to 9 million students in 2 years and that the Department is focused on closing the Pell shortfall – currently $11 billion – through increased efficiencies and more resources. The Pell program accounts for a third of the Department’s total $77 billion FY12 request. The Secretary cites the increasing number of lower income families and more families without jobs as the reason for the increased demand for the grants. Earlier this week, both Reid’s and Boehner’s debt ceiling deals contained an elimination of the in-school interest subsidy for graduate students, with the money saved by doing this going back into the Pell program to help shore up the shortfall for the next two years. Although this will have a negative effect on students, out of the many rumored changes to Pell that have been floating around during the past few weeks and the negotiation process, this is the best possible outcome for the university community. Pell and changes to the program will continue to be an issue as we head towards Fall and finishing up the FY12 process.

The Committee also brought up the concern that 89% of first-generation college students do not complete their degree. The Secretary stated that this was one of the Department’s FY12 priorities, and they are trying to solve this problem in three ways: 1) Fighting to maintain access to Pell. 2) Investing in community colleges and partnerships with the private sector to leverage funding. 3) Investing in programs such as i3 and the proposed “First in the World Competition”. The First in the World Competition would provide “venture capital” to encourage innovation approaches to improving college completion (particularly low-income and minority students), research support to build the evidence of effectiveness needed to identify successful strategies, and resources to scale up and disseminate strategies we already know are successful.

The Labor-HHS-Ed Appropriations bills have not yet been drafted in the House or the Senate and we don’t expect to see them until after the August recess.

State Dept Names New Science & Technology Adviser

Posted on July 27, 2011October 17, 2012

Late last week, Secretary of State Hillary Clinton named Dr. E. William (Bill) Colglazier as her Science & Technology Adviser. Congress established the position of Science & Technology Adviser to the Secretary of State in 2000; Dr. Colglazier is the fourth individual to hold the position.

Dr. Colglazier’s most recent position was Executive Officer of the National Academy of Sciences and Chief Operating Officer of the National Research Council. He holds a Ph.D. in Theoretical Physics from the California Institute of Technology and was formerly a Professor of Physics at the University of Tennessee.

In a notice to staff, the State Department noted that the mission of the Office of the Science & Technology Adviser is “to serve the U.S. national interest by promoting global scientific and technological progress as integral components of U.S. diplomacy including building partnerships with the national and international scientific communities.”

FY12 State & Foreign Ops Bill Released

Posted on July 26, 2011October 17, 2012

The House Appropriations Committee today released their FY12 State & Foreign Operations Appropriations bill, which will be considered in subcommittee tomorrow. The bill includes a total of $39.6 billion in regular discretionary funding, which is $8.6 billion or 18 percent below FY11 levels and $11.23 billion below the President’s FY12 request. Included in these reductions are cuts back to the FY08 levels or below for certain operations and assistance accounts.

Bill Summary:

International Security Assistance – The bill provides $8 billion in discretionary funding for international security assistance, a decrease of $61 million from last year’s level and $167 million from the President’s request. This includes funds for international narcotics control, nonproliferation and anti-terrorism programs, peacekeeping operations, foreign military financing, and international military education and training.

Bilateral Assistance – The legislation contains a total of $17.7 billion for bilateral economic assistance, a decrease of $3.5 billion below last year and $4.8 billion below the President’s request. This includes funding for global health programs, international disaster assistance, refugee assistance, the Peace Corps, the Millennium Challenge Corporation, and various economic and democracy promotion programs.

Multilateral Assistance – The legislation provides $1.6 billion for multilateral assistance, a reduction of $729 million below last year and $2.1 billion below the President’s request. This includes significant cuts to many international organizations and programs, including the World Bank, the Global Environment Facility, and several other international financial institutions. In addition, the bill eliminates funding for the Clean Technology Fund and the Strategic Climate Fund.

Export and Investment Programs – The bill provides $266 million for export assistance programs, a reduction of $84 million from the President’s request. The Trade and Development Agency – which promotes US trade interests abroad – is level funded at $50 million, the same as last year.

State Department Operations and Related Agencies – The bill contains a total of $11.9 billion in discretionary funding for operational costs of the State Department and related agencies – a decrease of $3.9 billion below last year’s level and a $3.1 billion below the President’s request. This includes funding for programs such as diplomatic and consular affairs, embassy security and operations, assessed contributions to international organizations, and international broadcasting. The bill also eliminates temporary pay raises for overseas officers.

United States Agency for International Development (USAID) Operations – The bill contains $1.04 billion for USAID – a reduction of $488 million from last year’s level and $705 million below the President’s request. The bill halts new hiring at USAID and stops expansion of facilities overseas associated with that hiring.

Policy Riders:

Global Gag Rule (“Mexico City Policy”) – A policy that prohibits all federal funding from going to any organization that uses their own funds to perform abortions, promote legalization, or provide counseling including these services.

UN Human Rights Council – Prevents the US from influencing the council by defunding our participation.

UN Peacekeeping Activities – Caps US contributions to UN Peacekeeping Activities at 25 percent. This abrogates our treaty agreement with the UN.

Defunds UNFPA – Blocks US contributions to the UN Population Fund.

Climate Change – Cuts funding to accounts and programs across the bill that address global climate change.

International Monetary Fund (IMF) – Rescinds funds appropriated to the IMF to shore up its role as the first responder to global financial crises.

Competing Debt Proposals Released

Posted on July 26, 2011October 17, 2012

The Senate Majority Leader has released draft legislation last night that would raise the debt ceiling through 2012 while trimming the deficit by $2.7 trillion over 10 years. The package would boost the debt limit by $2.4 trillion immediately, would not include any new revenues (taxes), and would not affect Medicare, Medicaid, or Social Security benefits. The Senate has not yet announced when they might vote on this legislation, but the August 2^nd deadline set by the US Treasury is looming. Meanwhile, the House Republicans have released their draft legislation to raise the federal debt limit. The House may vote as early as Wednesday on their proposal.

The House plan would authorize $1 trillion in new borrowing right away, and another $1.6 trillion would be allowed in several installments (unless two-third majorities in Congress objected each time). These additional “installments” would be considered only after a new special congressional committee proposes a package of entitlement cuts.

According to a fact sheet distributed by Democrats, the Senate plan would include $1.2 trillion in discretionary spending cuts, in both defense and non-defense programs, which were already agreed to in bipartisan talks led by Vice President Biden a few months ago. Another $1 trillion would come from “savings from winding down the wars in Iraq and Afghanistan,” an approach that the fact sheet says matches one used in the House GOP “cut, cap and balance” bill passed last week (HR 2560) and the House-passed budge resolution (H Con Res 34). The sheet said there would be $400 billion in interest savings as a result of the spending cuts, which it claims is also reflected in the House plans.

Another $100 billion would come from “savings” in mandatory programs negotiated by the Biden group. But according to the fact sheet, the savings “will not impact Medicare, Medicaid or Social Security benefits in any way.” This is good news for Graduate Medical Education (GME) funding that comes from Medicare and supports medical residency programs throughout the country.

The figure includes $40 billion in “program integrity savings,” which encompasses $15 billion by reducing fraud and abuse in mandatory programs through continuing disability reviews and Supplemental Security Income redeterminations, IRS tax enforcement measures, health care fraud and abuse control, and reviewing unemployment insurance for improper payments; $30 billion in savings at Fannie Mae and Freddie Mac; $15 billion from broadcast spectrum sales and changes to the Universal Service Fund; $10 billion to $15 billion in agriculture program changes; and unspecified savings from higher education programs that will go to “sustain the Pell grant program.”

For student aid/Pell Grants, the House and Senate plans are similar. They both eliminate the in-school interest subsidy for graduate and professional student loans, effective for any period of instruction beginning on or after July 1, 2012. The House plan includes an exception to the elimination of the in-school interest subsidy for students enrolled in a program leading up to a degree or certificate or students enrolled in a program necessary for a teaching credential or certification where such credential or certification is required by the state. This exception is not in the Senate bill.

Both the House and Senate plans use savings from the in-school interest elimination to provide additional mandatory funding for Pell, though in slightly different amounts. The House adds $9 billion in FY12 and $8 billion in FY13, while the Senate provides $10.5 billion in FY12 and $7.5 billion in FY13. Overall the Senate provides a total of $18 billion, while the House provides $17 billion for Pell.

Comparison of House and Senate Proposals

Debt limit increase

House Republicans:

• Add $1 trillion immediately to the current $14.3 trillion debt limit, which would be expected to allow the government to continue borrowing into the early months of 2012.

• The President would be authorized to request a further increase of $1.6 trillion only if the recommendations of a joint committee created to reduce the deficit are enacted. The second increase, if requested, would take effect unless Congress passed a resolution of disapproval, presumably by a two-thirds vote in each chamber to override an expected veto.

Senate Democrats:

• Add $2.4 trillion immediately to the current $14.3 trillion debt limit, which would be expected to allow the government to continue borrowing until after the 2012 election.

Savings from discretionary spending

House Republicans:

• Reduce spending immediately and cap future spending to save $1.2 trillion over 10 years. Adherence to annual spending caps would be enforced through a process of automatic spending cuts similar to the process created by the 1997 deficit reduction law (PL 105-33), which expired in 2002.

• The plan assumes no specific savings from declining war costs in Iraq and Afghanistan.

Senate Democrats:

• Reduce domestic and defense spending by a total of $1.2 trillion over 10 years, based on cuts negotiated in earlier meetings with Vice President Biden.

• The plan counts $1 trillion in additional savings from declining war costs in Iraq and Afghanistan.

Savings from mandatory programs

House Republicans:

• Create a 12-member joint committee of Congress that includes three Republicans and three Democrats from each chamber, and co-chairmen named by the House Speaker and Senate Majority Leader. The joint committee would be charged with reporting back to both chambers by November 23^rd with recommendations to reduce the deficit by an additional $1.8 trillion over 10 years. The committee proposal would be subject to up-or-down votes in both chambers by December 23^rd. No amendments would be permitted and a simple majority in each chamber would be needed for passage. A Senate filibuster would not be permitted.

• It is unclear whether the total amount of deficit reduction assumes savings from reduced interest payments on the federal debt.

Senate Democrats:

• Cut the deficit by $100 billion over 10 years by reducing waste and fraud in entitlement programs, improving IRS enforcement, curtailing agriculture subsidies, selling broadcast spectrum, and finding savings from Fannie Mae and Freddie Mac. No changes in Social Security, Medicare or Medicaid benefits are counted.

• The plan assumes $400 billion in savings over 10 years from reduced interest payments on the federal debt.

• The plan would create a 12-member joint committee similar to that in the House plan to recommend ways to reduce the deficit to about 3 percent of gross domestic product, but enactment of its recommendations would not be tied to the debt-limit increase.

Increased revenue

House Republicans:

• No tax increases assumed, although the joint committee would be empowered to consider additional revenue to achieve its deficit-reduction target.

Senate Democrats:

• No increase in revenue is assumed.

Balanced-budget amendment

House Republicans:

• Both chambers would be required to vote after October 1^st but before the end of 2011 on a proposed amendment to the Constitution that would require a balanced budget. The specific terms of the proposed amendment were unclear.

Senate Democrats:

• No balanced-budget amendment is assumed.