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Congress Back in Session

Congress returns to work this week after a long August recess period.  Appropriations measures will move quickly over the next few weeks, and the deficit reduction committee will begin their work.  Adding to an already busy first week back, President Obama is scheduled to release a new jobs package during an address to a joint session of Congress tomorrow night.  Check back frequently for updates. 

FY12 Appropriations Process Continues:  With lawmakers focused on the new joint deficit committee and long-term spending cuts, House and Senate appropriators are pressing to wrap up the FY12 spending process as quickly as possible though some partisan clashes are still likely.  House appropriators are set to advance two bills this week that have yet to see action in that chamber – Transportation-HUD and Labor-HHS-Education. 

Meanwhile, the Senate will begin long-delayed markups and formally set appropriations allocations.  With the end of the federal fiscal year quickly approaching (September 30th), a continuing resolution is almost certain to be needed and many insiders are hoping to avoid a repeat of the showdown over FY11 spending that took place earlier this year.  A senior House Appropriations aide said Tuesday that lawmakers will strive to complete the FY12 budget process before November 23rd, when the debt reduction committee is required to submit a plan for trimming the deficit by $1.5 trillion.

Senate appropriators will approve appropriations allocations and advance Agriculture, Energy-Water, and Homeland Security bills today.  The spending allocation levels in the Senate are expected to differ significantly from the numbers approved in the House, reflecting both the increased overall spending level agreed to in the debt limit agreement (PL 112-25) and different priorities between the Democratic-controlled Senate and Republican-controlled House.  

Meanwhile, the House Appropriations Committee is moving forward with its remaining bills, announcing Tuesday that it will mark up the Transportation-HUD bill on Thursday and the Labor-HHS-Education bill Friday. 

Deficit Reduction Committee Begins Work:  With the bipartisan panel set to hold its first meeting Thursday, some spending cuts proposed earlier this year could gain momentum and a perennial Pentagon target could once again be on the chopping block.  A starting point for the panel could be the recommendations of a bipartisan group of negotiators led by Vice President Biden, which identified hundreds of billions of dollars worth of potential reductions in the deficit on the mandatory side of the federal budget earlier this year.  The committee also may draw on the work of the Senate’s “Gang of Six” and on the recommendations made late last year by the President’s debt commission.

Staff for members of the super committee met yesterday to discuss options for moving forward with their charge to cut $1.2 trillion from expected federal deficits over the next decade.  Sources say that the super committee is close to finishing up a package of rules governing its activities.  In addition to the rules laid down in the law creating the super committee, the panel is trying to blend House and Senate committee rules to come up with a formula that works for the overall group.  

It is predicted that the super committee will recommend some cuts but not enough to prevent the automatic across-the-board reductions.  It’s important to remember that the debt bill requires automatic cuts imposed by a trigger, which are based on the difference between the goal and what the committee, Congress, and the President agree to.  If the committee comes up with nothing, the automatic cuts are based on $1.2 trillion.  If the committee can get $1.2 trillion through Congress and the President, then there are no automatic cuts.  But rather than making it an all-or-nothing equation, the framers of the bill allowed for a hybrid.  If, say, the committee can agree to $500 billion in deficit reduction, the automatic sequestration is based on $700 billion – or the difference between $1.2 trillion and the $500 billion all sides agreed to.  

Presidential Address Thursday Night:  President Obama will address a joint session of Congress on Thursday evening to unveil his new jobs package.  Early indications are that this package will attempt to lift the ailing economy through $300 billion worth of tax credits, school renovation projects, job training for the unemployed, and a program to prevent teacher layoffs.  All of this could help state governments that are continuing to make serious cuts in education and health services.   In his speech, Obama may also ask lawmakers to renew the 2 percent payroll tax cut that was approved in December and to extend jobless benefits.  More details will be posted here after this package is released.

Deficit Reduction Committee Complete

House Minority Leader Nancy Pelosi has tapped her three choices to serve on the deficit reduction super committee: Representatives James Clyburn (D-SC), Xavier Becerra (D-CA), and Chris Van Hollen (D-MD).  Pelosi vowed to appoint Democrats who would protect entitlement programs and push for revenue increases.  All 12 committee members are now in place.

More Super Committee Names

House Speaker John Boehner has appointed Ways and Means Chairman Dave Camp (R-MI), Energy and Commerce Chairman Fred Upton (R-MI), and Republican Conference Chairman Jeb Hensarling (R-TX) as the House GOP members of the deficit reduction “super committee.”  Hensarling will be co-chairman of the committee.  Senate Minority Leader Mitch McConnell also announced Wednesday the Senate Republican members:  Jon Kyl (R-AZ), Pat Toomey (R-PA), and Rob Portman (R-OH).

On Tuesday, Senate Majority Leader Harry Reid announced the Senate Democratic members of the committee: Patty Murray of Washington, John Kerry of Massachusetts and Max Baucus of Montana.  Murray will be the other co-chair.

House Minority Leader Nancy Pelosi has yet to name the House Democratic members of the committee.

Murray Tapped for “Super Committee”

Senate Majority Leader Harry Reid plans to tap Senator Patty Murray (D-WA) to serve as the co-chair of the deficit reduction super committee, which was created through the debt legislation approved last week.  According to Democratic sources, the other two picks for the Senate Democrats will be Senator Max Baucus (D-MT) and John Kerry (D-MA).

Debt Deal Done!

The House approved the deficit reduction bill last night by a vote of 269-161; 95 Democrats and 66 Republicans voted against the measure.  Congressmen Adam Smith and Jim McDermott voted no, while the remaining members of our delegation voted in favor of the bill. The Senate is expected to clear deficit reduction legislation at noon today.  And while it is not on the President’s schedule for today, he is largely expected to sign the bill before the close of business.  With his signature, a six-month-long battle over raising the debt ceiling ends but the next round begins with future fights over spending, taxes, and entitlement programs.  

With that vote, the House went into recess last night and is not expected back in DC until after Labor Day.  The Senate will join their House colleagues once they conclude their vote.

As I reported yesterday, the legislation would cap discretionary spending for FY12 and FY13, effectively freezing it at current levels and only adjusting it to match historical levels of inflation (2.2 percent) through 2021. It would also create a joint congressional committee tasked with finding between $1.2 trillion and $1.5 trillion in new savings, and sending a proposal to the House and Senate floor for guaranteed votes by December 23rd.  If those savings are not enacted, sweeping automatic budget cuts would be triggered.

Democrats are hopeful that the debt limit deal might generate more spending for domestic programs, while Republicans are concerned about cuts in defense.  The allocations would reverse cuts set in April by the House Republicans’ budget target, which would have lopped $30 billion from discretionary spending compared with FY11.  The Labor-HHS-Education and Transportation-HUD bills had been set to include the majority of those cuts and have yet to be unveiled in the House.  The extra funds could ease the path of those bills when they are marked up in September.  With an allocation to work from, Senate appropriators also hope to begin moving bills, which are almost certain to differ from their House-passed counterparts.