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Week Ending June 24, 2011

Cantor Pulls out of Budget Talks; House Balanced Budget Amendment (BBA) Vote Scheduled

This week, the Vice President Biden-led budget talks continued and progress seemed to be within reach to achieve a deal by the August 2 deadline.  On Thursday morning, however, House Majority Leader Eric Cantor (R-VA) and Senate Minority Whip Jon Kyl (R-AZ) withdrew from the bipartisan budget talks, refusing to tackle the issue of revenues.  While no official details have been released, there were reports that an agreement was reached on spending cuts of between $1 and $2 trillion.  Senate Budget Chairman Kent Conrad (D-ND) noted, however, that a $4 trillion deficit reduction plan is needed, and he would not support a smaller package.  Without Rep. Cantor and Sen. Kyl, it is likely President Obama and House Speaker John Boehner (R-OH) will now become involved.

Ben Bernanke, Chairman of the Federal Reserve continued to warn against proposed steep cuts, noting: “I don’t think immediate cuts in the deficit would create more jobs… In light of the weakness of the recovery, it would be best not to have sudden and sharp fiscal consolidation in the very near term.”

This week, the Congressional Budget Office (CBO) updated its long-term outlook on the federal budget, including an uptick of seven points in the debt to Gross Domestic Product (GDP) ratio for this year.  As spending is down, these changes are largely due to the bipartisan tax bill passed in December that extended the Bush tax cuts.  If Congress allows the tax cuts to expire, the debt projections for 2021 will be 15 points lower. In addition to the debt, there are concerns about rising health care costs. CBO estimates that the new health care reform law will slow this growth, but said additional cost containment measures are needed.   CBO urged Congress to reduce the deficits and debt either through spending cuts, increased revenues, or a combination of the two.

Conservatives in Congress continue to push for a balanced budget amendment (BBA) to the U.S. Constitution, which AFSCME strongly opposes.  The House plans to vote on a version of the BBA (H.J. Res. 1) the week of July 25. 

Direct Care Job Quality Improvement Act of 2011 Introduced

On June 23, Sen. Bob Casey Jr. (D-PA) and Rep. Linda Sánchez (D-CA) introduced the Direct Care Job Quality Improvement Act of 2011(S. 1273/H.R. 2341), which would ensure that home care workers receive the Fair Labor Standards Act’s minimum wage and overtime protections so long as they are not employed on a casual basis.  The bill also would promote a stable and competent direct care workforce by establishing a program to monitor the capacity and quality of the direct care workforce and a grant program to help states improve direct care worker recruitment, retention and training. 

Senate Finance Committee Holds Hearing on Health Care Entitlements

This week, the Senate Finance Committee held a hearing on Medicare and Medicaid, the two largest health care entitlement programs.  Massachusetts (MA) Governor Deval Patrick, the only sitting governor on the witness panel, stressed the importance of the continued partnership between the federal government and states to support and strengthen Medicaid.  He noted that Massachusetts has driven Medicaid costs down with a number of new initiatives and that all states currently have the flexibility to enact similar measures.  Gov. Patrick cautioned that converting Medicaid into a block grant as proposed in the House-passed budget would cost his state $23 billion in needed federal funding over 10 years and would be a serious threat to the state’s economic recovery.

Another panel witness, Bruce Vladeck, former Administrator of the Health Care Financing Administration (now named CMS) within the Department of Health and Human Services, stressed that our weak economy should not be used as an excuse to dismantle Medicaid or Medicare.  He noted that federal revenues as a percentage of GDP is at its lowest level since before the Korean War and that this is where Congress should focus to get our fiscal house in order. 

House Panel Examines Solvency of Medicare

On June 22, the Health Subcommittee of the House Ways and Means Committee held a hearing on the 2011 Medicare Trustees Report.  In calling for the hearing, Subcommittee Chairman Wally Herger (R-CA) stated that, “the findings of the Medicare trustees are alarming.  Medicare’s Hospital Insurance trust fund is expected to go bankrupt five years sooner than last year.”  Robert D. Reischauer, one of two Public Trustees for Medicare and Social Security, clarified in his testimony  that:  “It is worth noting that the date of exhaustion is seven years later than was projected in the 2009 report, the last report prepared before the Affordable Care Act was enacted.  While the five-year deterioration in the date of trust fund exhaustion might suggest that some major changes occurred in policy or in assumptions that is not the case.  Instead, rather small deviations of actual from projected performance in 2010 and small changes in assumptions about the future were enough to move the estimated date of exhaustion five years earlier.”  AFSCME’s statement for the record can be seen here.

Controversial Survey of Employer-Sponsored Coverage Misses the Mark

Earlier this month, the consulting firm McKinsey and Company issued a report forecasting that as many as three in ten employers would probably stop offering health care coverage after the Affordable Care Act takes effect.  The report generated substantial coverage for its provocative results.  It also came under substantial scrutiny because it contradicted analyses by the Congressional Budget Office, RAND, the Urban Institute, Mercer Consulting, Lewin Associates and others.  In fact, the results of the McKinsey report also contrast with the experience in Massachusetts.  After the state initiated its reforms, employer-sponsored coverage increased.  This week, McKinsey released the survey it used to query employers.  Analysts found a number of weaknesses in the survey methodology, further undermining the validity of its results. 

Comprehensive Immigration Reform Bill Introduced in Senate

This week, Sen. Bob Menendez (D-NJ), Majority Leader Harry Reid (D-NV), Sen. Dick Durbin (D-IL) and Sen. Patrick Leahy (D-VT) introduced legislation (S.1258) that takes a comprehensive approach to fixing our broken immigration system.  It includes an earned path to legal status for the estimated 11 million undocumented immigrants currently residing in the United States.  This would include paying taxes, learning English, paying a fine, passing a background check, and taking a place in line before permanent residence.  The bill also establishes a commission to evaluate labor market and economic conditions, which would inform government decisions on the future flow of immigrants through employment-based visa programs.  And, it would strengthen border security and worksite enforcement of immigration laws.

Legislation Introduced in House to Fund TANF Supplemental Grants

This week, Rep. Lloyd Doggett (D-TX) introduced legislation (H.R. 2277) that would fund Temporary Assistance for Needy Families (TANF) Supplemental Grants through the end of this fiscal year.  These grants, which provide additional TANF funds to high-poverty states and those with large population growth, are scheduled to expire on June 30.  This is the first year since the TANF block grant was created in 1996 that the Supplemental Grants have not been fully funded.  The whole TANF program must be reauthorized before September 30, 2011, and there is concern that this could be the first of more attempts to cut funding for this cash assistance program. 

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