Week Ending September 9, 2011
President Obama Calls for Job Creation
President Obama delivered a powerful speech to a joint session of Congress, laying out a bold agenda for job creation. His spirited presentation was a clear attempt to change the congressional agenda and move towards jobs creation and away from deficit reduction, which has preoccupied the Congress and the President over the past several months as they struggled with efforts to extend the debt ceiling. The President outlined an almost $450 billion jobs package, which would be paid for. The President challenged Congress, and Republican leaders in particular, to deal with the economy and create the jobs that people need.
The speech received positive support from congressional Democratic leaders. While most Republicans said it was too focused on spending, House Speaker John Boehner (R-OH) said it merited consideration. President McEntee issued a statement stating that the President is right that the country needs jobs right now, and that it’s time to put the middle class and the country first. He also stated that: "The President gets it, the suffering our members see on the frontlines of public service is real, and if the partisan response is the same old posturing about regulations, deficits and taxes, we’ll know they don’t.” The President also strongly defended public workers, declaring, “I reject that we need to strip away collective bargaining rights to compete in a global economy.”
The President’s jobs package contains $447 billion worth of proposals. Major provisions of the plan include: $35 billion to prevent layoffs of teachers and first-responders; $25 billion to upgrade public school infrastructure; $5 billion to modernize community colleges; $50 billion for “immediate investments” in transportation infrastructure; and creation of an infrastructure bank capitalized with $10 billion in federal money. The plan also calls for $15 billion to rehabilitate vacant property in neighborhoods with high concentrations of foreclosures.
The plan also includes tax incentives for hiring more workers, including a new tax credit to hire the long-term unemployed. It includes a “Returning Heroes” hiring tax credit to encourage the hiring of unemployed veterans. It also calls for an extension of the existing payroll tax holiday for employees, and with a nod to the GOP, he would extend it to employers by cutting the employer portion of the Social Security payroll tax in half for the first $5 million of a company’s payroll. Employers also would get a full payroll tax holiday for hiring new people or raising the pay of current workers.
The President’s plan also assists the unemployed by extending unemployment insurance (UI) for the long-term unemployed for another year. The plan couples this UI extension with initiatives to give states some flexibility in the operation of the UI program, which has been championed by some GOP members. The plan also calls for expanding job opportunities for low-income youth and adults by creating a new “Pathways Back to Work Fund” to pay for jobs and training. An additional tax provision would allow Americans, who owe more than their homes are worth, to refinance their mortgages at today’s near 4% interest rates. President Obama boldly put the onus on Congress to pass his plan and move on immediate job creation, saying he said he would take the fight to every corner of the country.
Super Committee Begins Work to Reduce Deficit
The Joint Select Deficit Reduction Committee,or “super committee,” comprised of three House Republicans, three House Democrats, three Senate Republicans and three Senate Democrats, met for the first time this week to approve the rules governing their proceedings. Led by co-chairs Sen. Patty Murray (D-WA) and Rep. Jeb Hensarling (R-TX), they are charged with preparing a detailed plan by November 23 to cut at least $1.2 trillion from the federal deficit over the next 10 years. The rules mostly focus on transparency to ensure that the public can track proceedings, such as requiring a seven-day public notice for hearings. Committee members noted that numerous proposals have been put forward from many groups, including recommendations from Bowles-Simpson, Domenici-Rivlin, and the Senate Gang of Six, among others. All members of the committee noted that the plan needs to address the crisis of 14 million Americans out of work.
By October 14, standing legislative committees may submit recommendations to the super committee concerning deficit reduction. If the super committee’s report is passed on a majority vote, then it must move through both the House and Senate under expedited procedures, with a floor vote in each chamber no later than December 23.
The Budget Control Act, which created the super committee, also requires a vote in the House and Senate on a balanced budget constitutional amendment between October 1 and December 31.
Federal Appeals Court Dismisses Challenge to Affordable Care Act (ACA)
On Thursday, the 4th Circuit Court of Appeals dismissed one of the highest profile challenges to President Obama’s health reform law. The Court dismissed a case brought by Virginia’s attorney general who argued that enforcing the law’s requirement, that almost everyone obtain health coverage, was a violation of Virginia law. The Court ruled that Virginia did not have the right to sue. During oral arguments, the panel of judges expressed the concern that allowing the suit to proceed would essentially allow the states to exempt themselves from whatever federal laws they might choose.
Two other circuit courts have ruled on the question of whether the individual responsibility requirement is constitutional. The 6th Circuit upheld the requirement in a ruling in June. The 11th Circuit ruled in August that the requirement is unconstitutional. It is widely expected that the U.S. Supreme Court will take up the matter and possibly issue a ruling next summer.
Nearly 1.3 Million Seniors Save $660 million on Rx Thanks to Affordable Care Act
Medicare provides access to prescription drugs for millions of beneficiaries. An important provision in the Affordable Care Act requires drug companies to provide a 50% discount on covered, named drugs for Medicare beneficiaries who are in the Medicare prescription drug gap, called the donut hole. Nearly 1.3 million people with Medicare have received the discount, saving a total of $660 million so far this year. Assistance for Medicare beneficiaries who have high prescription drug costs will expand as the law closes the coverage gap by the end of the decade. In addition, nearly 19 million Medicare beneficiaries have accessed one or more preventative screenings available free of charge, thanks to the new law.
Some policy makers have suggested increasing out of pocket costs to Medicare beneficiaries as a way to reduce the deficit. AFSCME vigorously opposes increasing costs to Medicare beneficiaries and working families as a means to reduce the deficit.
A recent study from the Inspector General of the Department of Health and Human Services identified a way to reduce Medicare costs without shifting more costs onto beneficiaries. The study found that Medicaid recouped 45% of its drug spending in rebates (or discounts from drug manufacturers) while Medicare Part D sponsors recouped only 19% of their spending in rebates. Medicare Part D sponsors negotiate discounts with drug manufacturers to reduce costs of drug coverage but, by law, drug manufacturers must pay a specified discount, or rebate, to state Medicaid agencies. The Medicare Drug Savings Act of 2011 (S. 1206/H.R. 2109), introduced by Sen. John D. Rockefeller (D-WV) and Rep. Henry Waxman (D-CA), would require drug manufacturers to pay the higher Medicaid rebates for drugs provided to Medicare beneficiaries who are also eligible for Medicaid. President Obama’s deficit reduction commission endorsed this proposal, saying it would save $49 billion over 10 years. It is not clear if the new Joint Select Committee on Deficit Reduction, or “super committee”, will consider this proposal, which cuts Medicare costs without increasing seniors’ health care costs or dismantling Medicare.
House Panel Holds Hearing on Job-Killing Legislation
On Thursday, the House Judiciary Immigration Subcommittee held a hearing on Chairman Lamar Smith’s (R-TX) American Specialty Agriculture Act (H.R. 2847), legislation intended to slow opposition to his E-Verify bill (H.R. 2164) that would make the error-ridden online employment verification system mandatory. H.R. 2847 would strip farm workers of their labor rights as well as bring up to 500,000 new guest workers into the U.S. a year, while failing to provide a path to legal status for the undocumented workers currently picking our crops. This new visa program would be administered by the Department of Agriculture instead of the Department of Labor, where the current guest worker programs are administered, a clear signal that growers’ concerns are primary. H.R. 2847 would not only allow growers to get a cheap and easily exploitable workforce, it also would weaken employment standards for legal workers. While Chairman Smith is correct that his E-Verify legislation would have a particularly devastating impact on agriculture, H.R. 2847 fails to prevent job losses throughout the economy due to mandatory E-Verify, and would accelerate the loss of jobs.
Both bills are expected to be considered in the House Judiciary Committee next week. AFSCME opposes them because they would cause over one million legal workers to lose their jobs in both agriculture and non-agriculture jobs, and they fail to provide the 11 million undocumented immigrants in the U.S. a path to legal status.
Congress Moves Forward with FY 2012 Funding
This week, the Senate approved funding levels for FY 2012 appropriations at $1.043 trillion, the level set in the Budget Control Act passed in August and $7 billion below current funding. This exceeds the level of $1.019 billion approved earlier in the House as directed by the Ryan budget, but is an unprecedented $157 billion below the President's original request. Funding for labor, public health, education and human services programs is $24 billion below the President's request but nearly equal to FY 2011 funding. House Republican Leader Eric Cantor (R-VA) had announced earlier that the House would respect the Senate funding levels.
The House Labor, Health and Human Services, and Education Appropriations Subcommittee was scheduled to determine funding levels and vote this week, but the vote was cancelled. It is unclear if action on the bill will resume next week. Rep. Cantor announced this week that the House would work on the continuing resolution (CR) the week of September 19 to keep the government operating after FY 2011 bills expire on September 30. The CR is expected to include funding through the week of November 14, shortly before the super committee is charged with releasing their plan to cut at least $1.2 trillion from the deficit over 10 years. At this point, it seems unlikely that the CR will be as contentious as FY 2011 funding. The super committee’s recommendations, if any, could complicate and delay final action on FY 2012 funding. AFSCME is working with Congress to ensure that critical labor, public health, education and human services programs receive as much funding as possible.
House Appropriations Subcommittee Cuts Funds for Public Housing & Transportation Programs
On September 8, the House Appropriations Subcommittee on Transportation, Housing and Urban Development (T-HUD) approved by a voice vote its funding appropriations bill for FY 2012, which provides dramatically less funding than President Obama’s request for key public housing, community development block grant, and transportation programs.
Compared to President Obama’s FY 2012 request, the subcommittee cut the Public Housing Capital Fund by $873 million, cut the Public Housing Operating Fund by $100 million, and cut the Community Development Block Grant (CDBG) program by $280 million. Compared to current funding, the subcommittee flat-funded CDBG. For public housing, it cut the Capital Fund by 25% or $508 million and the Operating Fund by 17% or $754 million.
Compared to President Obama’s FY 2012 request, the subcommittee cut the Federal Highway Administration (FHA) by $42.67 billion and the Federal Transit Administration’s (FTA) Formula and Bus Grants by $13.3 billion. Compared to current funding, the subcommittee cut FHA by 34% ($14.1 billion) and Formula and Bus Grants by 38% or $3.1 billion. These transportation programs are funded through trust funds and do not include regular annually-approved funding.
The next steps are uncertain. Neither the full House Appropriations Committee nor the Senate Appropriations Subcommittee has scheduled its work on this legislation. Given that FY 2012 starts on October 1, 2011, it is unlikely to be completed. We expect the House and Senate will pass a short-term continuing resolution to fund these and many other federal programs. At some point, we expect the House and Senate will combine T-HUD funding with other unfinished appropriations bills into an omnibus appropriations bill, which would last throughout FY 2012.
Senate Committee Approves Agriculture Spending Bill
This week, the Senate Appropriations Committee approved its Agriculture, Rural Development, FDA spending bill for FY 2012, with spending for annually-funded programs totaling $19.780 billion. It reduces non-security spending by $192 million below the FY 2011 level, and includes $266 million to respond to floods, storms and other natural disasters. The bill provides $6.582 billion for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), as compared to $6.734 billion in FY 2011 and $6.001 billion in the House-passed bill. According to the Senate Appropriations Committee press release, the reduction in funding is due to lower program participation rates than originally estimated. For other domestic nutrition programs that are annually-funded, the FY 2012 bill provides $382 million, as compared to $393 million in FY 2011.
Senate Committee Approves Highway Bill Extension
This week, the Senate Environment and Public Works Committee approved by voice vote a four-month extension of federal highway programs, which would extend them through January 31, 2012. The bill would also rescind $3.1 billion in unobligated federal highway funds on September 1, 2012. The four-month extension is the latest in a series of short-term measures Congress has enacted since the most recent multi-year surface transportation reauthorization expired in 2009. It is expected that the House will support an additional extension of highway programs. It is possible that the short-term extension could be included in a broader continuing resolution for FY 2012, which must be enacted by the end of September.
The Senate is continuing to work on a two-year reauthorization that would likely maintain current funding levels. But it is estimated that an additional $12 billion will be needed because spending currently exceeds deposits into the Highway Trust Fund. The Senate Finance Committee must find funding to offset this additional spending. Sen. Barbara Boxer (D-CA), Chair of the Environment and Public Works Committee, says she is ready to take up the long-term bill as early as next week.
Senate Hearing on Obama’s Nominee, Richard Cordray, to Lead Consumer Financial Protection Bureau (CFPB)
On September 6, the Senate Banking Committee convened a hearing on President Obama’s nominee, former Ohio Attorney General Richard Cordray, to direct the Consumer Financial Protection Bureau (CFPB). While the hearing was relatively quiet, 44 Republican senators have promised to block Cordray’s confirmation – or any other director – to lead the new CFPB unless there are significant changes to the CFPB’s governance, which would in all likelihood restrict the CFPB’s enforcement abilities. Until the Senate approves a nominee and a director is in place to lead the CFPB, its powers are limited. Republicans and Democrats continue to disagree over the CFPB’s powers, budget, and enforcement activities, with Republicans advocating for limits on the CFPB’s independence, funding, and authority to monitor financial institutions and regulate transactions. AFSCME strongly supports Cordray’s nomination.
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