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Category: Legislation

Budget Update

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Both the House and Senate are in session this week; just three more weeks of work before they break for the Fourth of July week. This week the House will take up the annual defense authorization bill, while the Senate completes work on its version of the farm bill and considers immigration legislation.

FY14 Appropriations: Last week the House passed its first two FY14 spending bills and should move another two by the end of this month. The House passed the Military Construction-VA and Homeland Security spending bills despite two veto threats, and Senate appropriators are set to mark up funding measures in the coming weeks. But the two chambers are operating off vastly different top-line budget numbers — given that the House and Senate haven’t come close to reaching a budget deal — meaning the measures may not come to the Senate floor and setting the stage for another stopgap spending bill this fall. At this point in the process, it appears that the House wants to pass the defense-related bills up front, leaving the later bills to be rolled up into a continuing resolution (CR) later in the year.

House appropriators are set to move two additional spending bills this week: Defense and Agriculture. House GOP leaders expect the bills on the floor before the July Fourth break. If those bills move through committee and pass the floor as expected, the House will have passed a quarter of its annual spending bills by the Fourth of July. The Senate, meanwhile, may not approve any of their spending bills before the break.

Debt Limit: Republicans continue to demand concessions in the form of deficit-reduction measures in return for increasing the government’s borrowing limit. Discussions are ongoing and there is still time to come to an agreement as the debt limit may not need to be addressed until this fall.

Student Loan Bills Fail in Senate

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This morning, the Senate took up both S 953, the Reed-Harkin-Reid-Murray two year extension of 3.4% interest rate on student loans and the Senate Republican alternative, S 1003, sponsored by Senators Tom Colburn and Lamar Alexander.  The Senate Republican bill would have tied student loan interest rates to the 10-year Treasury note rate plus 3 percentage-points.

The Chamber was technically voting to invoke cloture on motions to proceed to consideration on the measure. Both bills needed 60 votes in order to proceed to debate.  As expected, both bills of the competing measures failed to reach the 60-vote mark.

S 953 (Reed-Harkin-Reid) received a vote of 51-46.

S 1003 (Coburn-Alexander) received a vote of 40-57.

 

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.

Senate Moves to Add Student Loans Fix to Farm Bill

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The Senate continues to consider the Farm Bill this week. More than 200 amendments are pending consideration to the Farm Bill, including S953, known as the Reed, Harkin, Reid, Murray bill which would would increase taxes on multinational corporations to pay for a two-year extension for student loans at 3.4 percent. Senate Democratic leadership added the measure as an amendment last Friday.

Although it is not guaranteed to be considered as an amendment to the Farm Bill this week, the Senate will likely hold side-by-side votes on Reed’s plan and a House-passed Republican measure (HR1911) that the House passed last week which would peg the interest rates to the 10-year Treasury note. Each vote would require a 60-vote threshold for passage. It is expected that both measures would likely fail, thus increasing the pressure on the sides to develop a compromise.

Last Friday, Obama has blasted the House-passed bill, saying the legislation could saddle students with more debt than if rates are allowed to double to 6.8 percent on July 1, as scheduled.

The Office of Federal Relations will continue tracking this issue as it continues to develop.

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.