Federal Relations

July 15, 2013

Things Heat Up in Congress

Congress returns to work this week under a heat advisory for our fist long stretch of very hot and humid weather in DC. Today is predicted to see 94 degrees in the nation’s capitol, but it will feel more like 101 according to weather.com. And today will likely be the coolest day of the week! The good news (or bad news?) is that most of the action will take place indoors as Congress continues to slog through their cluttered agenda.

FY14 Appropriations: Appropriators in both chambers continue to move their FY14 spending bills forward this week, with the House ready to take up a $512.5 billion defense spending bill that accounts for more than half of the $967 billion in FY14 discretionary spending being considered in that chamber. On Wednesday, House Appropriations will also mark up the $47.4 billion Commerce-Justice-Science bill. The panel the same day will mark up a $17 billion Financial Services bill that would cut the Internal Revenue Service budget by nearly a quarter. Senate Appropriations subcommittees mark up their version of the Commerce-Justice-State and Homeland Security spending bills on Tuesday.

The major issue remains to be the $91 billion budget gap between the two chambers. The House and Senate are preparing spending bills that adhere to vastly different overall numbers, which will make reconciling any of these bills near impossible before September 30th. It is almost certain that we will see short-term continuing resolution this fall, with the final outcome unknown at this time.

Elementary and Secondary Education: The House is expected to begin debate this week on a GOP bill to reauthorize the federal education law known as No Child Left Behind. Among other things, the bill (HR 5) would eliminate an accountability system requiring all students to be 100 percent proficient in reading and math for their grade levels by 2014. It instead would allow states to develop their own standards in reading, math, and science, and leave to their discretion whether to set standards for other subjects. Democrats oppose the bill, arguing that it doesn’t replace the accountability system with anything, which could result in states setting even lower academic standards than they currently have.

This is the second time the House has tried to reauthorize the elementary and secondary education law, which expired in 2007. During the last Congress, the GOP-led education committee approved two overhaul bills, neither of which reached the floor for consideration.

Stafford Student Loans:  Congress and the White House appear to be edging closer to an agreement on interest rate changes for Stafford student loans. The latest plan disclosed late last week by the White House would include an interest rate cap and is estimated to be budget neutral.

Congress worked hard last to find a fix that would retroactively remedy a July 1st doubling of the interest rate on the subsidized portion of the Stafford loan from 3.4 percent to 6.8 percent. A bipartisan deal revealed last week did not receive further after the Congressional Budget Office scored the proposal as costing $22 billion over 10 years, a figure too high for Republicans to support.

The new White House proposal, which would peg interest rates to the 10-year Treasury note and includes a lower cap than the bipartisan Senate proposal did, scored zero by CBO. The White House plan would maintain the current structure of loans for undergraduates, which offers subsidized loans for low-income students and unsubsidized loans for higher-income students, or a mix of both depending on need. Those rates would be pegged to the 10-year Treasury note, plus two separate undisclosed percentages, and would be capped at below 8 percent.