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State of The Union

Tonight at 9 pm Eastern, 6 pm Pacific, President Obama is scheduled to give his 6th State of the Union address to Congress. The White House has been previewing certain initiatives, such as two years of free community college and paid sick leave, in advance of the speech tonight.

Tonight, however, the crux of his speech is expected to center around his economic proposals to promote the middle class and make a case for increasing federal spending on education and technology priorities. It is unclear, however, how his proposal to handle the largest funding issue confronting this last two years in office, the return of the Sequester spending cuts, will be received. The President is expected to propose increasing federal spending above the Budget Control Act levels in part by increasing taxes for the rich – his starting position in negotiations with Republicans that will ultimately determine the size of the budget for FY16.

Obama is unlikely to call for specific increases in stringent sequesters spending caps that start again in 2016, but he could call for ways to re-direct funds within those caps or come up with new revenues. As a remedy for past sequesters, the President has suggested maintaining funding for his priorities by increasing corporate taxes mainly by closing loopholes. That plan now would almost certainly be a non-starter on Capitol Hill with Republicans controlling both chambers.

The President did preview his tax increase proposals over the weekend, which included imposing a fee on financial institutions, closing the capital gains tax loophole on inherited assets, and raising the top rate of capital gains and dividends back to the Reagan rate of 28% among others. Additionally, Obama will propose increased and streamlined tax credits for the middle class for child care, two-earner families, and retirement savings.

For higher education, the President will propose consolidating the six overlapping education provisions into just two, while improving the American Opportunity Tax Credit (AOTC) to provide more students up to $2,500 each year over five years as they work toward a college degree. This move would likley make the AOTC permanent, index it to inflation, increase refundability, and resolve a significant problem of coordination with Pell grants that disadvantages low-income students. However, it is unclear how the  Lifetime Learning Credit would be handled and the impact on graduate students.

Read more about the President’s tax proposal here.

Watch the State of the Union at 9pm EST, 6 pm Pacific on most television stations tonight.

 

 

White House Proposes Two Years of Free Community College

In advance of his State of the Union address, President Obama is traveling to Tennessee today to announce one of his keystones of his 2015 agenda: two free years of community college.  The proposal, called America’s College Promise, is based on Republican Governor Bill Haslam, who developed and launched Tennessee Promise, which begins this year. Tennessee Promise allows any high school graduate in that state is eligible for two years of free community college tuition under the Tennessee Promise. The President’s announcement is expected to be a cornerstone of his FY16 Budget Request.

The Administration’s proposal would make community college free for any student who enrolls at least part-time and maintains a 2.5 grade point average. The plan would allow anyone admitted to a community college to attend without paying tuition, so long as they enroll in a program meeting certain basic requirements, and they remain on track to graduate in three years.Qualifying programs would be one of  two types: it would had credits that fully transfer to local public four-year colleges and universities or it would consist of training programs with high graduation rates that lead to in-demand degrees and certificates. All community college students, including those first entering community college or those going back to school, would be eligible for the program.

The White House estimates that approximately 9 million students would participate a year.

Any state participating would have to maintain funding for all higher education as well as pay 25% of the total cost. It is estimated the program could cost upwards of $15 billion per year. It is unclear how it would be paid for, but that information is expected to be made clear in the President’s Budget Request for FY16 on February 2.

Typically, the President would do these visits to promote new initiatives after the State of the Union and before the release of the President’s Budget Request. However, the President will be making a state visit to India after the State of the Union, and so promotion for big initiates is happening now in what the Administration is calling a Spoiler Alerts.

The President is expected to formally announce the America’a College Promise at 1 pm Eastern. In addition to Governor Haslam, the President will be joined by both of Tennessee’s Republican Senators, Bob Corker and Lamar Alexander. Senator Alexander is the Chairman of the Senate Health Education Labor and Pensions Committee.  Watch the announcement live here.

The Office of Federal Relations will continue to track and update information on this initiative as it becomes available.

 

Senate Passes FY15 Appropriations

In a very rare weekend session, the Senate voted 56-40 late Saturday evening to pass the FY15 $1.1 trillion spending package that funds most of the government through next September. As previously discussed in this blog, the package includes 11 appropriations bills that fund most of the government through Sept. 30 and a continuing resolution (CR) funding the Department of Homeland Security (DHS) through Feb. 27.

The bill nearly died in the House earlier last week after House Minority Leader Nancy Pelosi (D-CA) and Senator Elizabeth Warren (D-MA), a rising star among her party’s liberal base, urged House Democrats to oppose it. Regardless, the package narrowly passed the House on Thursday night in a 219-206 vote after Obama hit the phones to quell a Democratic uprising against it.

Notable Senators voting against the legislation include several Republican and Democratic senators rumored to have presidential ambitions such as Rand Paul (R-KY), Ted Cruz (R-TX), Elizabeth Warren (D-MA), Cory Booker (D-NJ), Amy Klobuchar (D-MN) and Kirsten Gillibrand (D-NY)

The vote culminates a week of acrimonious posturing in both the House and Senate and sends the spending bill to President Obama’s desk for a signature.

The House has recessed for the year and the Senate is expect to recess this week. Both bodies of Congress will reconvene in January 2015 to swear in the new 114th Congress.

FY15 Appropriations Released

Last night, House and Senate Appropriators unveiled a $1.1 trillion spending package that is a combination of all but one of the Fiscal Year 2015 (FY15) appropriations bills rolled into an omnibus for the remainder for FY15, plus a continuing resolution (CR) funding the Department of Homeland Security through February 2015. The FY15 appropriations package, dubbed the “Cromnibus,” would provide new funding for all government agencies and programs, except the Department of Homeland Security, and is designed to gain bipartisan support and avert both a government shut down or another continuing resolution, as was seen in FY 2014. The current CR runs through tomorrow (December 11, 2014). 

The deal is a victory for appropriators, who have insisted that spending caps set under the 2013 budget agreement would allow them to move most of the annual measures for FY15. The Homeland Security stopgap portion is an effort by Republicans leaders to force a showdown with the White House on immigration in the new Congress, when Republicans will control both chambers of Congress.

The Cromnibus will move as HR 83, a previously considered piece of energy legislation. By using a previously considered bill, House and Senate leadership is trying to overcome Senate procedural hurdles so that measure could be cleared as early as Friday. Regardless, with the current stopgap funding expiring on tomorrow, the House will likely pass a two- or three-day CR to guarantee there is no shutdown before the Senate takes action and sends the “cromnibus” to the President.

For domestic agencies, flat funding is the norm, with some spending tradeoffs made to build political support. For example, the bill’s education programs are almost level funded at $70.5 billion, only $100 million less than last year. Democrats, however, will be pleased with level funding of $8.5 billion for Head Start and $22.5 billion for Pell grants, an amount that would raise the maximum grant award by $100 to $5,830.

Overall, Appropriators said the entire Labor-HHS-Education section of the spending bill would contain $156.8 billion in discretionary money, roughly the same level enacted last year. The title is always among the most contentious of the annual spending bills because of the wide reach of the programs under its jurisdiction and has become even more of a lightning rod since passage of the health care overhaul in 2010.

Additionally, the bill would provide $100 million, a $1.6 million increase, for the Office of Civil Rights, which is responsible for investigating Title IX complaints of inappropriate campus response to sexual violence. Moreover, the Student Aid Administration received a $230 million increase from last year to $1.4 billion with part of that funding going to increased enforcement and data collection under the Clery Act. The Committee commended the Education Department for its emphasis on campus sexual assault prevention.

The Defense Department, however, would see its base budget rise $3.3 billion over current funding to $490.2 billion, an amount still $500 million less than what was requested by the Pentagon.

Of note in the Cromnibus:

  • National Institutes of Health received $30.1 billion, which is $150 million more than FY14.
  • National Science Foundation received $7.34 billion, which is $172.3 million above the 2014 enacted level. NSF’s MREFC received $200.8 million.
  • The Department of Education was cut by $166 million overall. Pell grants, however, received a net increase for ED of $137 million increasing the maximum award to $5,830. Federal Work Study received an increase of $15 million. The Student Aid Administration received an increase of $230.924 million. Race to the Top was eliminated.
  • National Aeronautics and Space Administration (NASA) received $18.01 billion for which is $363.7 million more than the 2014 enacted level.
  • National Oceanic and Atmospheric Administration (NOAA) received $5.4 billion, which is $126.4 million more than the 2014 enacted level.  Big winners at NOAA were Weather, which received $90.8M, which is $9.6M above the FY14 enacted level. Climate accounts remained relatively level with previous funding. Sea Grant received level funding of $62 million. NOAA Cooperative Labs and Institutes received $60 million, which is level funding. The bill provides $60 for Climate Competitive Research, Sustained Observations and Regional Information, the same as the FY14; $38M for Regional Climate Data and Information; $8.5M for Integrated Ocean Acidification, which is $1.5M above the FY14 enacted level; $41.3 for Sustained ocean observations and monitoring, which is comparable to the FY14 enacted level
  • National Weather Service operations received $954.2 million for, which is $526,000 above the 2014 enacted level.
  • The US Geological Survey received $5 million in additional funding Early Earthquake Warning funding on the Pacific Coast.
  • The Department of Defense’s S&T programs generally enjoyed increases in funding (6.1: $2.279 billion (+$112 million over FY14); 6.2: $4.605 billion (-$38 million below FY14);  6.3: $5.530 billion ($155 million above FY14)

The House is expected to pass the measure on Thursday and send to the Senate. The Senate is expected to pass it Thursday or Friday. The President is expected to sign it into law Friday.

Federal Relations will continue to update information on the Cromnibus as it move through the Congress and becomes law.