Issues / Legislation » Legislative Weekly Reports

Week Ending August 5, 2011

Debt Ceiling Goes Up; Budget Caps Clamp Down

This week Congress approved a budget deal in the Senate by a vote of 74-26 and in the House by a vote of 269-161 that President Obama immediately signed into law.  The Budget Control Act raises the debt ceiling long enough to avert government default through 2012 and imposes tight spending caps for the next 10 years. It imposes an initial cut of $840 billion in federal government spending over the next decade.  It requires Congress to appoint a 12-person “super committee” split evenly between Republicans and Democrats to prepare an additional $1.2-$1.5 trillion in budget savings to be voted on by both chambers before the end of this year. These savings could include cuts to Social Security, Medicare and Medicaid, as well as tax increases.

In the absence of a bill passed by both chambers or if the budget savings are less than $1.2 trillion, across-the-board spending reductions will be triggered beginning in 2013 but Medicaid, Social Security, Medicare benefits, and other safety net programs are exempt. Cuts through 2013 are required to be split evenly between security and non-security spending, including defense, homeland security and veterans’ programs. No revenues were included in the package.  The cap would reduce spending by $7 billion for FY 2012.

The law also requires Congress to vote on a constitutional balanced budget amendment this fall, but unlike previous versions of debt deals, it does not require that Congress pass such an amendment.

This deal is no compromise. The Tea Party wing of the Republican Party held the nation hostage to advance an extreme ideology at the expense of what is good for the nation and our economy. At a minimum, it will slow economic recovery and impose more joblessness, wage cuts and hardship on America’s working families.  It will surely impact state and local governments which are facing collective budget shortfalls of $100 billion this year. Further reductions in federal investments will add to the 577,000 jobs lost in state and local governments since 2008, which our economy and working families can ill afford.

As the super committee moves forward to craft the second round of cuts and Congress moves ahead with determining the details of implementing spending cuts, AFSCME will fight alongside our friends in Congress and the President to ensure that budget policies create rather than destroy jobs and they protect vital programs, including Social Security, Medicare and Medicaid rather than preserving tax breaks for the wealthiest Americans and prosperous corporations.

Much will be at stake as the new “super committee” is established and begins its work to negotiate further debt reduction. Not only must we protect Social Security, Medicare and Medicaid and win revenue increases, we must demand that Washington tend to the real crisis in America – the jobs crisis. During the August congressional recess, AFSCME will be working with our allies in and out of the labor movement to demand that Congress take the side of Main Street over the side of Wall Street. As part of that effort, we urge you to continue to make calls to your Senators and Representative demanding that they oppose cuts to Medicaid, Medicare and Social Security. Tell them that they should cut tax breaks for the wealthy, not Medicare, Medicaid or Social Security. Please call your members of Congress toll-free at 202-224-3121.

Tea Party Makes August Push to Privatize Medicare

The debt deal puts an intense focus on Medicare this fall when Congress must adopt steep spending cuts or have automatic cuts triggered. Tea Party-affiliated group FreedomWorks has called for its supporters to attend town halls in political battleground states in August and to press for support for House Budget Committee Chairman Paul Ryan’s (R-WI) budget, which included a plan to privatize Medicare and shift costs to current beneficiaries. The proposal was passed by the House along party lines in April. House Majority Leader Eric Cantor (R-VA), in a recent interview with the Wall Street Journal, indicated that he is willing to break the promise of Medicare to those who have paid into the system for years and who depend on its guaranteed benefits, saying “promises have been made that frankly are not going to be kept for many.” While AFSCME, along with our allies, will continue to fight against proposals to weaken or end Medicare, Medicaid and Social Security, the Tea Party groups’ action plan highlights the urgency for AFSCME activists to oppose calls for working families and retirees to sacrifice their health care while preserving tax cuts for millionaires, billionaires and wealthy corporations.

Congressional Leaders End Stalemate; Agree To Fully Fund the FAA

Congressional leaders have reached a bipartisan compromise between the House and the Senate to fully fund the Federal Aviation Administration (FAA) until September 15.   The deal will put 74,000 federal employees and construction workers back to work.  AFSCME will continue to fight for retroactive pay for our members since the latest agreement does not address that issue. “This agreement does not resolve the important differences that still remain,” Senate Majority Leader Harry Reid (D-NV) said, “but I believe we should keep Americans working while Congress settles its differences.”  AFSCME President Gerald W. McEntee applauded Sen. Reid’s leadership and added that: “In these difficult economic times, it is jobs and not political gamesmanship that Americans truly value.”

Medicare Beneficiaries See Real Savings Thanks to Affordable Care Act

For more than four decades, Medicare has been a resounding success in providing access to medical services and reducing the financial burden of health care for senior citizens and other beneficiaries. The Affordable Care Act (ACA) strengthens Medicare for the 48 million Americans who rely on this public health insurance program to stay healthy. Recent data from the U.S. Department of Health and Human Services indicates that 17 million Medicare beneficiaries have received free preventive services this year because of the ACA, while 900,000 who hit the prescription drug donut hole have received a 50% discount on their prescription drugs. The dollar amount of these out-of-pocket savings on drug costs for Medicare beneficiaries has risen to $461 million through June 2011. For state-by-state information on the number of Medicare beneficiaries who have seen lower out-of-pocket costs for prescription drugs, please visit http://www.cms.gov/newmedia/03_partd.asp. For state-by-state information on utilization of free preventive services and annual wellness visits, please visit: http://www.cms.gov/newmedia/02_preventive.asp. This lifesaving help for seniors would disappear if the changes to Medicare proposed by House Budget Committee Chairman Paul Ryan became law. The House of Representatives adopted Chairman Ryan’s budget along party lines in April.

Congressional Fight Continues over Consumer Financial Protection Bureau

While the Consumer Financial Protection Bureau (CFPB) officially opened for business on July 21, Republicans and Democrats continue to disagree over the CFPB’s powers, budget and enforcement activities, with some lawmakers attempting to restrict CFPB’s independence, reduce its funding level and weaken its authority to monitor financial institutions and regulate transactions.  Furthermore, Republican senators recently announced opposition to the President’s recent nominee for CFPB Director, Richard Cordray, who is a former Ohio Attorney General and CFPB’s director of enforcement.  Demonstrating their systemic opposition to the CFPB, Senate Minority Leader Mitch McConnell (R-KY) said: “Senate Republicans still aren't interested in approving anyone to the position until the President agrees to make this massive new government bureaucracy more accountable and transparent to the American people.” On May 5, 44 Republican senators signed a letter to the President stating that “we will not support the consideration of any nominee, regardless of party affiliation, to be the CFPB director until the structure of the Consumer Financial Protection Bureau is reformed.”  Interestingly, former Sen. Mike DeWine (R-OH), who defeated Cordray in last year’s election for Ohio Attorney General, recently said: “Cordray is very well qualified for this job.”

Due to the Senate’s recess, the Banking Committee rescheduled its nomination hearing for Cordray from August 4 to September 6.  AFSCME strongly supports Cordray and recently signed a letter to the Senate, along with a diverse coalition of labor, investor, consumer, senior and other civic organizations, which urges swift confirmation of Cordray as CFPB’s director.   

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