Week Ending July 15, 2011
Balanced Budget Amendment Pulled from House Floor, Subbed with “Cut, Cap and Balance”- But Senate BBA Action Possible
The House had planned to vote next week on H.J. Res. 1, the extreme version of the balanced budget amendment which would require an annual balanced budget, cap spending at 18% of gross domestic product (GDP), require congressional supermajorities of 2/3 to raise revenues, and a 3/5 vote to raise the debt ceiling and waive the rules. H.J. Res. 1 would require deeper cuts than the House-passed budget.
In an abrupt shift, though, House leaders have pulled the bill from next week’s schedule and indefinitely from the House floor. Instead, they plan to introduce a “Cut, Cap and Balance” bill that is reportedly similar to the Senate’s version (S. 1340). Rep. Jason Chaffetz (R-UT) is the lead sponsor for a House bill which would require spending cuts in fiscal year 2012, impose 10-year caps on discretionary and mandatory spending, and make its requirements tied to Congress approving a balanced budget amendment, according to Rep. Robert Goodlatte (R-VA), the lead sponsor of H.J. Res. 1. The caps in this bill would similarly devastate Medicaid, Medicare, Social Security and critical domestic programs.
It is possible that Senate Minority Leader Mitch McConnell (R-KY) may attempt to force a vote on the Senate BBA measure (S.J. Res. 23). AFSCME is strongly opposed to H.J. Res. 1, S.J. Res. 23 and any other balanced budget amendments or statute calling for a constitutional balanced budget amendment. We organized a coalition letter with nearly 250 national organizations in opposition, which was sent to all House and Senate members.
A balanced budget amendment and budget caps would have devastating consequences for the U.S. economy. It would put the country in an economic straitjacket, making it impossible to address changing economic circumstances, crippling the ability of the federal government to operate, and hurting Americans struggling through hard economic times.
Broad Budget Deal Unlikely; Contingency Plan in the Works
As the clock ticks closer to financial default on August 2, there are no further definite details for what the final plan will be to raise the debt ceiling and address the deficit. The GOP has vowed to oppose raising revenues, and Democrats are opposed to cuts to Social Security, Medicare and Medicaid. The latest development is a contingency plan that could move forward absent a broad budget agreement. The plan was originally proposed by Senate Minority Leader Mitch McConnell (R-KY), and is currently under discussion with Majority Leader Harry Reid (D-NV). While the details of what might emerge are not yet clear, McConnell’s original plan would structure three separate congressional votes that would gradually and automatically raise the debt ceiling over the next year and a half. The proposal would also require President Obama to submit a list of spending cuts equal in cost to debt ceiling increases. Sen. Jim DeMint (R-SC) said on Twitter today that he would use “every tool” available to stop this fallback proposal, and expressed his support for the cut, cap and balance bill supported by the House Republican leadership.
Action Intensifies to Protect Social Security
There is ongoing concern that a Social Security benefit cut resulting from a change in calculating the cost-of-living adjustment and a continuation and expansion of the 2% reduction in the Social Security payroll tax remain under active consideration in the deficit talks. AFSCME Legislative Director Charles Loveless represented organized labor in a press call late last week to call attention to the negative effect that both of these policies would have on the Social Security program. Also participating in the call were Sens. Bernie Sanders (I-VT) and Sheldon Whitehouse (D-RI) as well as representatives from senior, Hispanic and women’s organizations. In addition, the AARP this week brought thousands of its members to Washington, D.C. to lobby to protect Social Security, and Social Security Works, a large coalition that includes AFSCME, organized a two-day Senate call-in campaign urging senators not to cut benefits or support expansion of the payroll tax cut.
House Subcommittee Holds Hearing on the Fair Labor Standards Act
The House Education and the Workforce Subcommittee on Workforce Protections, chaired by Rep. Tim Walberg (R-MI), held a hearing on Thursday, July 14 focusing on “The Fair Labor Standards Act: Is It Meeting the Needs of the Twenty-First Century Workplace?” Enacted in 1938, the Fair Labor Standards Act (FLSA) sets forth basic employment rules concerning minimum wages, maximum hours and overtime pay. The Department of Labor estimates that more than 130 million workers are covered by the FLSA.
Witness Judi Conti of the National Employment Law Project urged passage of the AFSCME-supported Direct Care Job Quality Improvement Act of 2011 (H.R. 2341), which would remedy a serious flaw in current law that excludes home care workers from the basic protections of the FLSA. This exemption harkens back to a time when home care workers were usually friends or relatives of ailing adults, who spent only a few hours a day helping them with menial tasks around the house. Conti explained: “As the population has aged and the home care industry has grown, the role of home care aides has also changed significantly. Home health care workers today are trained and devoted professionals who deliver skilled health care to many of our nation’s seniors and ailing adults in a highly professional manner. They work long hours, often perform back-breaking work, and are invested with significant responsibility. Whatever the merits of their original exclusion from minimum wage and overtime protections, this archaic exemption has failed to keep up with the evolution of the industry and the workers who have built it. It is long past time for Congress to remedy this inequity by extending minimum wage and overtime protections to home health care workers.” To see if your Representative supports H.R. 2341, please go to: http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR02341:@@@P.
Future of Trade Adjustment Assistance Unclear
In two simultaneous sessions called last week to consider the Korea, Colombia and Panama free trade agreements, congressional Republicans lined up against including a continuation of the Trade Adjustment Assistance (TAA) program in the Korea free trade agreement as proposed by the Obama Administration. The opposition occurred despite the fact that key GOP leaders, including Ways and Means Committee Chairman David Camp (R-MI), had agreed to extend a modified version of the program for two years. As a result, the GOP majority in the House Ways and Means Committee excluded the worker adjustment and assistance program in the Korea free trade legislation while the Democratic majority in the Senate Finance Committee retained it. Prospects for the TAA program now are unclear.
Senate Rejects Resolution to Reduce Federal Budget Deficit by Requiring Millionaires to Pay More
The Senate voted to reject a Sense of the Senate Resolution which stated: “Any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort.” While the Senate voted 51-49, largely along party lines, to end debate on the Resolution, it required 60 votes for approval and thus failed. Every Democratic Senator except Ben Nelson (NE) and David Pryor (AR) voted for the Resolution and all 47 GOP Senators voted to reject it.
House Committee Approves Legislation to Preempt State and Local Taxes on Wireless Communications
The House Judiciary Committee approved via voice vote the Wireless Tax Fairness Act (H.R. 1002), which would prevent state and local governments from imposing new taxes on wireless communications services or property at different, higher rates than taxes imposed on other services or property. H.R. 1002, introduced by Rep. Zoe Lofgren (D-CA), would be effective for five years and would apply to only new taxes – existing taxes would be grandfathered and unaffected. For these reasons, H.R. 1002 is not expected to reduce revenues as significantly as similar legislation. The committee approved two amendments. Rep. Lofgren’s amendment permits a jurisdiction’s electorate to impose this type of tax through a referendum. Rep. Maxine Waters’ (D-CA) amendment requires the federal Government Accountability Office (GAO) to study and issue a report on these taxes.
H.R. 1002’s supporters claim that state and local governments should be barred from setting different tax rates on different types of services and products. AFSCME strongly disagrees and opposes H.R. 1002 and similar federal legislation that preempts state and local taxing authority. They should be able to decide their own tax policies based on local, democratically-decided preferences, economic conditions, and revenue needs. Many other organizations representing states and localities oppose H.R. 1002, including the National League of Cities, National Association of Counties, and the U.S. Conference of Mayors. There are no specific plans for H.R. 1002 to move to the House floor or be taken up in the Senate, where Sen. Ron Wyden (D-OR) introduced similar legislation (S. 543).
Additional Federal Spending in Health Reform will Result in Significant State Savings
The nonpartisan Urban Institute issued a report this week that showed states will see substantial savings in health care spending for Medicaid, mental illness and uncompensated care under the Affordable Care Act (ACA). Overall, state governments are likely to spend $92 billion to $129 billion less from 2014 to 2019, due largely to ACA provisions aimed at reducing the number of uninsured and increasing federal support for health care functions previously financed by the states. States will see a net savings of $14 billion for Medicaid from 2014 to 2019, with additional federal funds for Medicaid expansion and covering existing Medicaid enrollees outpacing increased state spending. The state-based insurance exchanges are projected to save states about $10.3 billion beginning in 2014 because the ACA will provide federal subsidies to some low-income people who are currently on Medicaid to enable them to buy private health insurance. Medicaid expansion will also increase coverage for individuals with mental illness, which will result in state savings of $13 billion to $26 billion from 2014 to 2020. And, by reducing the uninsured population through the Medicaid expansion and subsidized coverage on the exchanges, the ACA will reduce state spending on uncompensated care by $26 billion to $52 billion.
Congressional partisan wrangling and debt reduction negotiations have placed key ACA provisions at risk. The House voted largely along party lines in January to repeal the ACA in its entirety, and has since voted to defund key provisions. Currently, substantial cuts to federal funding for Medicaid are on the table as part of debt ceiling negotiations. AFSCME will continue to work to ensure that the ACA is implemented so that states, the federal government and individuals reap the financial and health care benefits from this landmark legislation.
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