Congressional leaders have reached a tentative deal on a payroll tax cut, extend unemployment benefits, and delay rate cuts to doctors who treat Medicare patients.  Under the proposed plan, a 2-percentage point payroll tax cut would be extended until the end of this calendar year.  The cost of this tax cut would be added to the federal deficit. Unemployment benefits would also be extended for the next 10 months and doctors who treat Medicare patients would avoid seeing their payments cut. Those two provisions would cost about $50 billion and be paid for with cuts elsewhere in the federal budget.

One of the most sensitive issues in the final negotiations was the question of how much Medicare should compensate hospitals for the bad debt accumulated when patients don’t provide their required co-pays for care (uncompensated care). Medicare currently compensates hospitals for 70 percent of their loss and the House proposed to cut this to 55 percent — saving more than $10 billion over 10 years. But this puts a heavy burden on hospitals that provide a lot of uncompensated care – like Harborview.  The final compromise lowers the bad debt cut to about $7 billion, which is better than the original proposal from a couple of months ago but it will still be a blow to hospitals with low-income patients.

Senate Republicans are posed today to initiate an effort to block automatic budget cuts scheduled to take place next January.  They will propose replacing the first year of the spending “sequester” with a plan to shrink federal employment and extend a pay freeze on government workers.  The effort is an attempt to stave off what many view as potentially devastating cuts to the Pentagon.

Late last year, House Armed Services Chairman McKeon (R-CA) offered a similar proposal (HR 3662) that quickly received a veto threat from the White House.  McKeon’s legislation would save more than $120 billion over a decade, effectively offsetting the first year of the statutory sequester of both defense and non-defense spending. That would push off until FY14 the spending cuts triggered the Budget Control Act (PL 112-25) that was approved by Congress last August.

The Senate’s proposed bill, the Down Payment to Protect National Security Act of 2012, will add credibility to the sequester repeal effort due to the high-profile sponsors of the bill, including Senators Jon Kyl (R-AZ), John McCain (R-AZ), John Cornyn (R-TX), Lindsey Graham (R-SC), and Kelly Ayotte (R-NH).

Like McKeon’s measure, the Senate legislation would replace $109 billion in estimated, across-the-board spending cuts that are set to kick in January 2, 2013 with savings from a reduction in the federal workforce over a decade.  McKeon’s proposal would trim the workforce by 10 percent by replacing every three workers who leave an agency with just one new hire.  The Senate bill would cut the workforce by 5 percent, replacing every three full-time workers who leave with two new hires.  The Senate bill goes farther than the House measure by also finding savings by extending the current pay freeze for federal civilian workers until June 30, 2014.  Contrast that will what is expected to be in the President’s FY13 budget request: a 0.5 percent pay bump for federal employees in his budget proposal due February 13^th, bringing an end to the two-year freeze.

Senator Murray (D-WA) has already expressed her opposition to the GOP plan via Twitter, where she posts “GOP to lay out plan to avoid def. cuts tmw. Who thinks it will also avoid having wealthy pay fair share? Ask only middle class sacrifice?”

House Republicans released the text of their much-anticipated $260 billion, four-and-a-half-year surface transportation reauthorization bill last night.  You can read the text of the bill here (PDF).  Legislation action on the draft bill begins in earnest today as the House Natural Resources Committee marks up the bill’s energy title.  That markup, starting at 10 am today, will tackle the controversial proposal to link transportation funding to increased energy production in ANWR and along both coasts.  The House Transportation & Infrastructure is scheduled to markup the policy provisions Thursday, with House Ways & Means Committee markup of the financing expected February 3^rd.  Finally, the House Energy and Commerce Committee will markup the drilling provisions on February 8^th.

Here’s a partial list of what made it into the House bill, with more to come.

Highway funding: Highways would be funded at $37.4 billion in FY13, rising to $38 billion for FY16 (this is essentially level funding).

TIGER Grants:  Eliminates the TIGER discretionary grant program.

University Transportation Centers: Eliminates “Regional, Tier I, and Tier II Center” from SAFETEA-LU and replaces them with 10 Regional Centers funded at $3.5 million and 20 Standard Centers funded at $2 million.  The language directs one of the regional centers to focus on Comprehensive Transportation Safety, and one (separate) regional center to focus on Intelligent Transportation Systems.   The bill requires a new round of competition 180 days from enactment of the legislation.

Transportation Enhancements: The bill would eliminate the Transportation Enhancements set-aside, which is set at 10 percent of a state’s Surface Transportation Program funds.  This could hurt UW’s efforts to secure federal funding to improve the Burke Gilman Trail.  I understand that Reps. Tom Petri (R-WI) and Tim Johnson (R-Il) will offer amendments to restore funding to the Transportation Enhancements and Safe Routes to School programs.

Bridge inspections: Mandates inspection standards for highway bridges and tunnels, and requires the creation of a training program for bridge inspectors.  Of particular interest to research universities that are working with composites is a section that reads:  The Secretary shall establish research and development programs… (C) The development of more durable highway and bridge infrastructure materials and systems, including the use of carbon fiber composite materials in bridge replacement and rehabilitation. We understand that this wording is in Section 7005 under Research and Development (page 626 of the draft T&I Bill).

Tolling: Significantly expands tolling on the National Highway System, including for initial construction, initial construction of a lane on an existing highway that increases its capacity, and reconstructing both interstate and non-interstate highways under certain conditions.

Truck weight: Truck weights would be allowed to be increased from 80,000 pounds on five axles to 97,000 pounds on six axles.  States could also boost weights up to 126,000 pounds on some portions of the interstate.

Minimum DUI penalties: Creates minimum penalties for driving while intoxicated, including for first-time offenders, which includes suspension of a person’s driver’s license.  In some cases driving privileges could be reinstated contingent on installation of an ignition interlock device that requires blowing sober on a Breathalyzer before the car will start. 

Amtrak: Reaches back into the 2008 law (PL 110-432) that last reauthorized Amtrak and brings back some of the passenger rail service’s authorization levels.  The bill would cut Amtrak’s authorization for operating grants for FY12 and FY13 from $616 million and $631 million respectively to $466 million and $463 million.

House Speaker Boehner will start working his caucus today to build support for quick passage of the surface transportation bill. Conservatives in his conference feel they were shut out of developing the bill and worry they will be forced into voting for a measure that they don’t support and that has little chance of passing the Senate.  House Democrats may also oppose the funding options that use drilling royalties to pay for the bill.

In the Senate, the Finance Committee mark up the revenue title of their surface transportation bill has been delay (again) until next week. The Senate version offers a two-year, $85.3 billion version of the authorization approved by the Senate Environment and Public Works Committee late last fall. Like the House measure, it also calls for continuing spending at current levels. 

Funding issues remain the biggest obstacle to passage of either version (or a compromise bill). The main source of dollars, fuel taxes collected by the Highway Transit Fund, has been depleted because of the development of more fuel-efficient vehicles and fewer miles driven by consumers. In its new projections, the Congressional Budget Office found that the trust fund’s balance in FY11 was $22 billion, and the balance will be spent down precipitously: to $12 billion in FY12, $3 billion in FY13, and zero for the remaining 10 years. The House proposal would seek new funding for the bill from royalties by expanding oil and gas exploration along coastal waters and in the Arctic National Wildlife Preserve, but the plan is likely a non-starter with many Democrats.

Congress last cleared a surface transportation bill (PL 109-59), known as SAFETEA-LU, in 2009, and the current short-term extension (PL 112-30) expires at the end of March.

After negotiations late into the night and leaders finally reaching an agreement, the House today released the conference report containing details for the remaining nine spending bills. The House is expected to vote on the package this afternoon and then send it to the Senate for quick passage. It looks like Congress will remain through the weekend to try and work out a deal to extend the payroll taxcut for another year.

FY2012 Spending Bills Conference Report (HR 2055)

Defense

• Overall Discretionary= $518.1 billion, an increase of $5.1 billion over FY11
• RDT&E (Overall) = $72.4 billion, a decrease of $2.5 billion from FY11

• DARPA language: The conferees recommend a total of$166,122,000 in undistributed reductions

throughout the Defense Advanced Research Projects Agency (DARPA).  The conferees

direct the Director of DARPA to provide a report to the congressional defense

committees, not later than 60 days after enactment of this Act, detailing by program

element and project the application of each undistributed reduction

• NAVY University Research Initiatives = $133.2 million

Energy & Water

• Department of Energy overall discretionary = $32 billion, increase of $328 million over last year’s level
  • ARPA-E = $275 million, increase of $95 million from FY11
  • EERE = $1.825 billion, decrease of $10 million from last year
  • Office of Science = $4.889 billion, increase of $5 million over FY11

Interior and Environment

• Department of Interior
  • USGS = $1.07 billion, $30 million less than FY11
  • NEH = $146.3 million, $9 million less than FY11
  • NEA – $146.3 million, $9 million less than FY11
• EPA
  • Office of Science and Technology = $795 million

Labor-HHS-ED

• HHS overall discretionary = $69.7 billion, decrease of $700 million from FY11
  • HRSA = $6.5 billion, decrease of $41 million from FY11
    • Health Workforce  = $734.4 million
    • Ryan White HIV/AIDS Program = $2.33 billion, level funded
    • Healthcare Systems = $83.5 million, $3 million cut from FY11

**Note: language included that states that an additional $161.8 million may be used to supplement programs under the sections: “Primary Health Care”, “Health Workforce”, “Maternal and Child Health”, “Ryan White HIV/AIDS Program”, “Health Care Systems”, “Rural Health”

• • CDC = $6.1 billion ($38 million above FY11)
    • NIOSH (overall funding level)= $182.9 million, also includes language: “in addition to amounts provided herin, $110.7 million shall be available from amounts available under section 241 of the PHS Act”
      • Education and Research Centers = $24.3 million
      • Agriculture Forestry and Fishing Program = $22 million
  • NIH = $30.7 billion, $299 million above FY11 level
  • SAMHSA = $3.5 billion, $27 million below FY11
• Education overall discretionary = $71.3 billion, decrease of $153 million below FY11
  • Pell = $5550 maximum award is maintained by implementing the following changes (estimated to save $11 billion over 10 years):
    • Eliminate the interest subsidy during the 6 month student loan grace period
    • Limit grants per student to max of 6 yrs/12 semesters
    • Require HS Diploma, GED/completion of homeschool program for eligibility
    • Slight adjustment of minimum Pell grant
    • Reduce eligible automatic income level from $30K to $23K

• International Education = $74.2 million

• • IES = $594.8 million
  • JAVITS and GAANN programs will be consolidated at the recommendation of the administration
  • TRIO = $840 million

State

• International Fisheries Commission (top line number) = $36.3 million

And this language:

The conference agreement includes funding for the  operational costs of  the International

Pacific Halibut Commission, including current lease expenses, and the conferees direct the

Commission to fund these costs prior to investing in new programs or expanding existing

programs

The Week Ahead

The House is in at noon today, though no votes are expected.  Eight bills will be considered under suspension of the rules.  House Republicans will try to move forward on a deal to extend the expiring payroll tax cut and could hold a vote this week.  The Senate’s in at 2 pm and will consider the nominations of four judges for district courts in New York, Texas, and Montana.  There will be a vote on one of the nominations; the other three are expected to be confirmed by unanimous consent.  Other than that, both chambers of Congress will continue to work on wrapping up the year’s business before adjourning for the holidays.  The biggest item on the agenda is funding the federal government for FY12.  The current continuing resolution (CR) expires December 16^th.  Appropriators will spend the week working on an omnibus bill with a tentative plan to release a package on December 12^th for a December 15^th vote. 

Appropriations

Appropriators expect to make progress this week on wrapping the nine remaining FY12 appropriations bills into a year-end omnibus package.  Appropriators say that work on many of the remaining appropriations bills is nearly complete and their goal remains to clear the roughly $900 billion package before the current continuing resolution expires December 16^th.  

Payroll Taxes, Unemployment Benefits, and the “Doc Fix”

Lawmakers also want to deal with proposals for extending an expiring payroll tax break, continuing unemployment benefits, and maintaining the current Medicare physician reimbursement rate, all of which are likely to be negotiated into a single legislative package.   The Obama administration is pushing for extending and expanding last year’s payroll tax, with a cost estimate of $120 billion for 12 months, and would pay for it by creating a new surtax on the top-earning Americans.  Senate Republicans blocked that proposal (S 1917) last week.  The GOP then countered with their own plan (S 1931), which called for paying for the break by extending the current pay freeze for federal workers and shrinking the federal civilian workforce through attrition.  That proposal was rejected by Democrats.  Meanwhile, House conservatives are skeptical of any extension.  The White House has indicated it may be willing to negotiate alternative financing, but any offsets would have to satisfy a significant number of Democrats, who will be needed to pass the bill in the House and the Senate.

A plan to block pending cuts to Medicare physician payments due to take effect early next year is also on the table.  This is an issue faced annually by Congress.  House Republicans want to freeze current reimbursement rates for two years at a cost of $38.6 billion, while senators from both parties say a one-year “doc fix” may be more feasible at a lower cost of $21 billion.  A longer fix would buy more time for members to come up with a replacement for the current payment formula, known as the sustainable growth rate (SGR), but Congress would prefer the lower price since it’s not usually offset.

The Office of Federal Relations continues to monitor and weigh in on these issues with our Congressional delegation.  At the same time, we are looking ahead to the FY13 process and how we can best protect major federal research funding.

After a long weekend of negotiations and finger pointing, members of the Joint Select Committee on Deficit Reduction are all but ready to admit failure.  They will continue to work through the day Monday, but it appears unlikely that the eleventh-hour negotiations will yield a budget agreement before the deadline later tonight.  The barriers to success remain the same:  Democrats want more in revenues and Republicans want more in entitlement cuts.  Closed-door negotiations were held throughout the weekend and will continue late into Monday night as the panel seeks to meet its mandate of finding $1.2 trillion in deficit reduction over the next decade, otherwise automatic budget cuts will be triggered. The talks have been stalemated for two weeks, with Republicans unwilling to back any deal that goes beyond $250 billion in new tax revenue and Democrats seeking to prevent entitlement programs from deep cuts.

The panel’s deadline for advancing a proposal is midnight Wednesday, but the bill must be scored by the Congressional Budget Office at least 48 hours in advance of a vote, making today the real deadline.  If no deal is reached, panel leaders are weighing whether to hold a final public session, where each side could present and vote for its own plan, or simply offer a statement saying the effort has failed.  If the panel does come to an accord by some late and remote miracle, Congress would have until December 23^rd to approve the legislative package without any amendments.

Source:  CQ

The House begins work at 10:00 am.  They plan to debate and hold votes in the afternoon on a constitutional balanced budget amendment, and the first minibus appropriations bill for the Departments of Agriculture, Commerce- Justice-Science, and Transportation-HUD.  This measure also contains a new continuing resolution (CR) to extend through December 16^th.  The Senate will also convene at 10:00 am and will consider the FY12 defense authorization bill.  Both chambers had originally planned to be out of session next week for the Thanksgiving holiday, but with the deadline looming for the Joint Deficit Reduction Committee to make their recommendations we expect to see members working through the weekend and into early next week.

FY12 APPROPRIATIONS ENDGAME:  It is becoming clear that appropriators will need to consider a year-end omnibus bill to get the remaining nine of 12 stalled FY12 spending bills enacted.  The leaders of the House Appropriations Committee – including our own Congressman Norm Dicks – expressed a strong desire to finish the FY12 appropriations process before they leave for the year rather than allowing it to spill into 2012.  In order to avoid a year-long CR, Congress will have to clear an omnibus.

JOINT DEFICIT REDUCTION COMMITTEE:  Negotiations over a deficit reduction agreement seemed near an impasse yesterday, with few signs that a partisan gap over raising tax revenue and cutting entitlements could be bridged.   Time is running out for the committee, which must present a plan to cut the deficit by at least $1.2 trillion by November 23^rd or automatic spending cuts will be triggered (to take effect in 2013).   Realistically, the panel would need to have a deal in place this week – or by early Monday morning at the very latest – to meet a requirement that the Congressional Budget Office score it 48 hours in advance of any vote.

The obstacles to success are familiar.  Democrats continue to demand more revenue increases and Republicans are still calling for deeper cuts to health care programs.  One version of “Plan B” would have the committee vote on competing Republican and Democratic proposals, aimed at forcing the other side’s hand.  Republicans, meanwhile, have begun pondering potential fallback plans, including moving legislation that would most likely cut less than $1.2 trillion but softens the blow of the mandated cuts.  There’s even talk of coupling a deficit-reduction package with must-pass measures like unemployment insurance to sweeten the deal for Democrats and President Barack Obama.

The House will vote this week on the final conference report on the FY12 Agriculture, Commerce/Justice/Science (CJS), and Transportation/Housing and Urban Development (THUD) Appropriations bill – also known as the “Mini-bus” (House Report 112-284). The package also contains a Continuing Resolution (CR) to avoid a government shutdown and continue federal operations until December 16, 2011 – or until Congress completes the remaining nine FY12 Appropriations bills. This CR is a “clean” extension and includes no new funding provisions.

Overall Funding Levels– The Conference Report upholds the overall regular (base) discretionary level of $1.043 trillion as agreed to in the Budget Control Act (BCA). The legislation also includes $2.3 billion disaster relief funding, which falls under the “disaster designation” cap set by the BCA.

Continuing Resolution – Funding for all federal programs and agencies not included in the three underlying Appropriations bills in this conference agreement will be extended until December 16, 2011. This is a date-change extension only – no other funding changes are included in the CR portion of the agreement.

Agricultural Research – The conference agreement provides more than $2.5 billion for agricultural research programs, including the Agricultural Research Service and the National Institute of Food and Agriculture. This is a reduction of $53 million from the FY11 level. Highlights include:

• AFRI funded at $264.5 million.
• Hatch Act funded at $264 million.
• Grants for cooperative forestry research funded at $33 million.

Patent and Trademark Office (PTO) – The bill provides $2.7 billion for the PTO – the full requested level. This amount is $588 million, or 28%, above last year’s level. The bill also includes language that allows PTO to keep and use excess fees should actual collections exceed estimates, subject to Congressional approval of spending plans.

National Institute of Standards and Technology (NIST) – NIST is funded at $751 million, including an increase of $33 million above last year to support core NIST scientific research programs that help advance US competitiveness, innovation, and economic growth. In addition, funding for the Manufacturing Extension Partnership program – which provides training and technical assistance to US manufacturers – is maintained at last year’s level of $128 million.

National Oceanic and Atmospheric Administration (NOAA) – The bill provides $4.9 billion for NOAA, which is $306 million (7%) above FY11 and $592 million (-11%) below the President’s request. Within this total, National Weather Service operations are funded at $903 million – $24 million above the current year – and a total of $924 million is included for the Joint Polar Satellite System weather satellite program. The conference agreement does NOT include funding to establish a new NOAA Climate Service. The Administration requested $322 million to establish this new entity within NOAA.

National Aeronautics and Space Administration (NASA) – NASA is funded at $17.8 billion in the conference agreement, which is $648 million below last year’s level and $924 million below the President’s request. Highlights include:

• $5.1 billion for NASA Science programs, which is $155 million above last year’s level. The agreement accommodates cost growth in the James Webb Space Telescope (JWST) by making commensurate reductions in other programs.
• $138.4 million for NASA education research and development activities.
• $40 million for the National Space Grant College program.

National Science Foundation (NSF) – The legislation funds NSF at $7 billion, which is $173 million above last year’s level and $734 million below the President’s request. Within this funding, NSF’s core research program is increased by $155 million to enhance basic research critical to innovation and U.S. economic competitiveness.  The Major Research Equipment and Facilities Construction (MREFC) account is funded at $167.1 million, which is up $50 million from FY11.

Source:  House Rules web page, House Appropriations web page, CQ

Happy Monday morning!  It will be a busy week in Washington, DC with the continuing resolution (CR) expiring on Friday, appropriators scrambling to approve at least one “mini-bus” before week’s end, the Joint Deficit Reduction Committee deadline looming next week, the House taking action on a balanced budget amendment, and Obama announcing the next phase of his “We Can’t Wait” agenda.

Super Committee

Although the bipartisan panel officially has until November 23^rd to make their recommendations, it would take time to write legislative language and have it officially analyzed by the Congressional Budget Office by that deadline, as is required by the August debt limit law (PL 112-25) that created the committee. This means that the group will need to have the outlines of a deal in place by the end of this week.  On a positive note, members of the bipartisan panel have recently indicated their willingness to compromise on issues important to each party – such as increasing revenues and curtailing entitlements. Republicans for the first time have opened the door to an increase in new tax revenue, while Democrats have proposed deeper spending cuts, which could include both Medicare and Medicaid. Despite that progress, both parties rejected proposals leaked last week that contained those concessions, each side saying that the other’s plan had not offered enough.  

First Mini-Bus:  Agriculture, Commerce-Justice-Science, and Transportation-HUD

Appropriators are expected to file a conference report Monday on the first mini-bus of FY12 spending bills, setting the stage for Congress to clear it by week’s end.  The package contains roughly $127.8 billion in discretionary appropriations for the Agriculture, Commerce-Justice-Science, and Transportation-HUD spending bills for FY12.  It is expected to be passed first by the House and then by the Senate.  The largely non-controversial bundle will contain a new CR to keep government running through mid-December, since the current stopgap measure expires on Friday.  

Second Mini-Bus:  Energy-Water, Financial Services, and State-Foreign Operations

The Senate will begin debating the second mini-bus package this week, and hope to take action on the measure next week before leaving for the Thanksgiving holiday.  The package, which includes the Energy-Water, Financial Services, and State-Foreign Operations spending measures, would provide a total of $129.5 billion for the various agencies in FY12.  In a sign of bipartisan support, 81 senators backed cloture on the measure last week but support for bringing the bill to the floor may mask stumbling blocks that lie in controversial amendments, which are expected to target both funding levels and policy provisions in the bills.

Balanced Budget Amendment

House leaders plan to bring up for consideration a balanced budget amendment to the Constitution.  This measure will be a more “traditional” version rather than one that mandates spending caps and requires a supermajority for raising taxes.  Supporters of the traditional balanced-budget amendment, which requires that outlays do not exceed revenues and a three-fifths majority to raise the debt ceiling, emphasize that the same version passed in the House in 1995 with 300 votes, including 72 Democratic supporters. The vote, scheduled for later this week, will fulfill a requirement of the August debt limit law and also satisfy members of the House Republican conference who are eager to back it.  Constitutional amendments require a two-thirds majority to pass either chamber, which is 290 votes in the House and 67 votes in the Senate.

Obama’s “We Can’t Wait” Issue of the Week:  Healthcare Workforce

According to the Washington Post, the Obama administration will announce today as much as $1 billion to hire, train, and deploy healthcare workers, part of the President’s broader “We Can’t Wait” agenda to bolster the economy after his jobs bill stalled in Congress last month.  Grants can go to doctors, community groups, local government, and other organizations that work with patients in federal healthcare programs such as Medicare and Medicaid.  The funds are for experimenting with different ways to expand the healthcare workforce while reducing the cost of delivering care.  There will be an emphasis on speed, with new programs expected to be running within six months of funding.   The Center for Medicare and Medicaid Innovation, created as part of the Affordable Care Act, will administer and oversee the program, called the Health Care Innovation Challenge. 

Sources:  CQ, Washington Post, Politico

Resolutions were introduced in both the House and the Senate (H.Res.458 and S.Res.313) recognizing the UW’s 150th year and its’ contributions to Washington state and the nation.

The Senate resolution – introduced by Senator Cantwell and cosponsored by Senator Murray, passed the chamber this morning by unanimous consent.

The House Resolution was introduced by Congressman McDermott and cosponsored by Representatives Smith, Larsen, Inslee, Dicks, Reichert, and Herrera Beutler.

Link to Cantwell Press Release

← Previous Page — Next Page →