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Category: 2014 UW Federal Agenda

Today in Congress: Student Loan Bills

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The Senate is in at 9:00am and will hold three procedural votes on the farm bill and two rival bills to keep interest rates low for student loans. It’s not certain either can clear the 60-vote threshold in the Senate. The Republican-led House already has taken action on loans – and drawn a veto threat from Obama. Interest rates on new subsidized Stafford loans are set to double from 3.4 percent to 6.8 percent if Congress doesn’t act by July 1, but talks between Democrats and Republicans have largely broken down.

The House is also in at 9:00am, with votes expected between 11:00am and 1:00pm on the Homeland Security Appropriations Act. The White House has threatened a veto, stating Congress shouldn’t consider spending bills until the House and Senate agree on an overall budget framework.

Later this afternoon, Senator Frank Lautenberg’s (D-NJ) casket will arrive at the East Senate Steps of the Capitol. A Color Guard ceremony will be held, and then Lautenberg will lie in repose on the Lincoln catafalque in the well of the Senate. Senators and staffers will get a chance to pay their respects. Reporters will have access to the press gallery of the Senate Chamber, and members of the public will have an opportunity to pay respects from the gallery.

September Stalemate on FY14 Appropriations

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Members of Congress return to DC this week to take on the farm bill, try to keep student loan interest rates from doubling on July 1st, and continue with the FY14 appropriations process. And while immigration reform is still being debated, some are now skeptical that the House and Senate can come get to a compromise.

FY14 Appropriations

The path to enacting FY14 appropriations measures is paved with legislative friction as Congress is showing no signs of undoing the sequester. At this point, there are three budgets — House, Senate, and White House — all of which assume no sequestration, but include different ways to account for the cuts in later years. House Republicans would meet the overall cap but ignore the mandated split between security and non-security spending. Senate Democrats would use a higher overall level. And the White House budget request also ignores the overall cap. This is all leading up to a September stalemate as the current fiscal year comes to a close on September 30th.

Meanwhile, House Appropriations subcommittees approved their first two spending bills before Memorial Day (Homeland Security and Military Construction/Veterans Affairs), each with just a slight increase over current levels. These slight increases, along with spending increases expected in the soon-to-be-considered Defense bill, won’t leave much for the remaining non-defense bills – including the Labor-HHS-ED bill – which will have to take significant cuts to reach post-sequester levels as outlined by the 302(b) allocations approved in the House last month.

The Senate hasn’t approved its 302(b) allocations nor released any spending bills, but we expect to see Senate Appropriations Chairwoman Senator Mikulski (D-MD) move forward with FY 2014 using a top line spending number that assumes the sequester has been replaced.

FY15 Budget Process Underway

In Washington, DC there are usually three budget cycles ongoing at any given time. Right now, federal agencies are spending FY13 money; Congress is working to approve spending levels for FY14, which starts on October 1st; and federal agencies are beginning to build their FY15 budget requests. To guide this process, the White House released its annual guidance memo last week. This guidance memo noted that the President still hopes to replace the sequester with a combination of spending cuts and changes in entitlements and the tax code. But OMB Director Burwell effectively told agencies to plan for sequester by asking them for proposals that “reflect a 5 percent reduction below the net discretionary total provided for your agency for 2015 in the 2014 budget” as well as a plan that would double that reduction in 2015 to 10 percent. Agency budget requests will be submitted to the White House later this fall and ultimately combine to form the President’s budget delivered to Congress (usually) in early February.

Secretary Duncan advocates long-term student interest rate solution

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Secretary of Education, Arne Duncan, testified before the House Committee on Education and Workforce today. During the hearing, House Chairman Klein specifically asked Secretary Duncan to clarify the Administration’s position on the student loan issue. The Republican attempted to elicit an endorsement from Duncan of their bill, HR 1911, the Smarter Solutions for Students Act,  which is founded largely on a market-based rate proposal included in the president’s fiscal 2014 budget request. While Duncan stopped short of explicit endorsement, he in his response Duncan dismissed the the Senate Democrats’ short-term fix (S 953) to simply extend the current 3.4 percent interest rate. With a strongly worded response, Duncan advocated for a long-term, budget-neutral fix for student loans rather than a short-term fix.

“We are very interested in a long-term solution,” Duncan said. “The idea of coming back every two years to try and fix something, with all the real challenges we face, and the fact that we can’t take this off the table… I just don’t understand it. I look forward to working with you and others to find some common ground.”

Duncan’s response to Klein here. 

HR 1911 is expected to be considered by the full House this Thursday.

FY14 Appropriations Update

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Appropriations:  This week, House appropriators are expected to approve a plan for writing FY14 spending bills that would make deep cuts in domestic programs in order to protect defense programs. The overall figure will adhere to the spending caps set by recent budget agreements and assumes the sequester will apply to FY14 without a larger agreement to cut the deficit. At question is how the overall amount will be divided between the 12 annual spending bills. The GOP approach makes it clear that they intend to preserve national security spending at the expense of domestic programs favored by Democrats.

The allocations provide a combined $625 billion in FY14 for the Defense, Military Construction-VA, and Homeland Security bills, which would be a cut of $4 billion, or less than one percent, from the current enacted level. Discretionary spending in the rest of the government — covered by the other nine spending bills, including the Labor-HHS-ED bill — would be cut by about $72 billion, or 17 percent, from current levels.

The Labor-HHS-ED bill would provide $121.8 billion, about $35 billion, or 22 percent, less than the current level. House Appropriations Committee Chairman, Hal Rogers (R-KY) has not ruled out increases in spending allocations if lawmakers can come to a broad budget accord to reduce the deficit and replace the sequester. But for now, House Republicans appear to have adopted a strategy of back-loading the cuts on bills, such as Labor-HHS-Education, to buy them some time for possible negotiations.

Debt Ceiling:  The debt ceiling increase debate is one issue that appears to be off table in budget negotiations. With the law suspending the ceiling on federal borrowing authority expiring over the weekend, on Friday Treasury Secretary Lew formally told lawmakers that Congress won’t need to raise the debt limit again until after Labor Day. When the legislation was approved earlier this year, it was assumed the debt limit would need to be increased by late spring or early summer. Lew reiterated the Administration’s pledge that it won’t negotiate with Congress over the debt ceiling, despite ongoing talks among Republican lawmakers aimed at a strategy of using the need to raise the debt limit as leverage in a broader debate over tax and spending policy.

House GOP Proposes Austere FY14 Appropriations Plan

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Late yesterday, the House Republicans released new spending targets for FY14 appropriations bills. Under the GOP numbers, the Labor-HHS-ED bill will face a nearly 20 percent reduction on top of the cuts already made in the March 1st sequestration order. These programs would be capped at $121.8 billion — or about $28 billion below the best available estimates for post-sequestration appropriations. This represents $42 billion, or 26 percent, below what was enacted in FY10. House Appropriations Committee Chairman Hal Rogers (R-KY) appears to be scaling back spending for these programs, as well as for transportation, housing, environmental, and natural resources programs, in order to provide significant increases for a few of the 12 annual bills this summer. For example, Pentagon spending would rise to $512.5 billion, a roughly 6 percent increase over the reduced levels allowed under sequestration. We expect similar increases for Military-VA and Homeland Security.

Meanwhile, Senate Appropriations Committee Chairwoman Barbara Mikulski (D-MD), whose state is home to the NIH, pledged to work with the top senators on the Labor-HHS-ED subcommittee to ensure they get an appropriate allocation to fund these programs. The Democrat said she is “worried about the sequester’s effect on the people who work at NIH as well as extramural programs such as those run by universities.” Senator Richard Shelby (R-AL), the top Republican on the full committee, said he would work with Mikulski to try to increase funding for NIH in the face of the sequester. Other Senators also pledged their support for NIH funding, including Senators Tom Harkin (D-IA) and Jerry Moran (R-KS) – top ranking members of the Senate Health, Education, Labor, and Pensions (HELP) Committee. But despite the bipartisan support, there are still concerns that GOP priorities would prevent Congress from giving NIH the necessary funding resources.

The Office of Federal Relations continues to remind the Washington state delegation about the substantial fiscal impact NIH grant funding has on our economy. Please contact us if you have information that will help inform Members of Congress about the importance of NIH funding.