Legislation & Politics

Week Ending February 27, 2009

Congress – The Week of February 23, 2009

Obama Submits Budget Plan

President Obama submitted to Congress the outline of his federal budget for fiscal year 2010, which the House and Senate will consider in the coming weeks.  The budget is a non-binding blueprint of expected policy and funding changes that will guide spending decisions for the fiscal year beginning on October 1.  A version with more specific program-by-program funding levels is expected later in the spring. 

The budget's cornerstone is Obama’s plan to “transform and modernize the health care system.” The budget calls for setting aside a reserve fund of $634 billion over 10 years that will be dedicated to financing first steps towards achieving health care reforms.  Funding comes from raising taxes on the wealthy, closing corporate tax loopholes and changes to federal programs.  The program changes include AFSCME-advocated proposals to restore fiscal integrity to Medicare by reducing private Medicare Advantage plans by $175 billion over ten years.  The President’s proposal would also save the federal government and states money by increasing the prescription drug rebates paid to Medicaid by drug manufacturers.  The budget also includes proposals to increase the availability of generic drugs, including biologic generics.

On the tax side, the budget calls for making permanent the $800 (for joint filers; $400 for single) “Making Work Pay” tax cut for 95 percent of America’s working families while preserving all dedicated payroll taxes that fund Social Security and Medicare; continuing to cut taxes for families through an expansion of the Child Tax Credit; and making the $2,500 American Opportunity Tax Credit permanent to help kids afford college.  The Obama budget plan will also leave in place recent tax breaks for middle-income earners, but let expire the 2001 and 2003 Bush tax cuts for taxpayers making more than $250,000 annually, fulfilling his campaign promise.  He is also committed to making saving for retirement easier as the economy recovers by laying the groundwork for the establishment of automatic workplace pensions on top of and outside of Social Security.

Another major theme is a call for fiscal responsibility and honest budgeting through cutting the deficit by at least half over the next four years. At the same time, the budget calls for new investments in clean energy, education, infrastructure, as well as national security and veterans programs.  The budget includes new investments in early childhood education, doubling funding for the Early Head Start program, expanding Head Start, and beginning a major new effort to ramp up the Nurse-Home Visitation program.

The President’s budget also calls for upgrading critical infrastructure through a new federal commitment to high-speed rail, including a $1 billion a year high-speed rail state grant program; enhanced security at over 90 major ports; improvements in homeland security; and investment in clean and safe drinking water with programs to fund over 1,000 clean water and nearly 700 drinking water projects annually based on average project costs.    

House Passes Current Year “Omnibus” Spending Bill

This week the House completed unfinished business from the last Congress, passing, by a vote of 245 to 178 an omnibus spending bill (H.R. 1105) for the remainder of FY 2009 which ends on September 30.  It includes the nine bills that fund the major domestic agencies, plus the State Department and foreign aid programs, in one package.  The bill provides $410 billion in funding for vital public services and critical needs, charting a new course after years of Bush Administration underfunding.  This spending level is about $31 billion more than was spent in FY 2008, an 8% boost. These funding levels are separate from and in addition to temporary, stimulus-related funding increases contained in the economic recovery package.

Many provisions in the FY 2009 spending bill will help states and hospitals improve the health care system including $2.2 billion for community health centers, an $125 million increase above FY 2008; $746 million to upgrade state and local public health capacity; $75 million in new grants to expand health care coverage; and $22 million for a new initiative to help hospitals and clinics reduce infections. 

In other areas, the FY 2009 spending bill would ramp up funding to state and local law enforcement to $3.2 billion, a 16% increase; increase federal support for special education with $558 million above 2008 for a total of $11.5 billion; increase Title I grants to schools by $648 million, with total funding of $15.7 billion; increase Head Start funding $235 million above 2008, with total funding of $7.1 billion; increase Child Care and Development Block Grant funding by $65 million, with $2.1 billion in total funding; help states process record numbers of unemployment claims with $260 million above 2008 for a total of $2.8 billion; help unemployed workers receive training with $2 million above 2008 for a total of $1.5 billion; allocate $40.7 billion for highway spending, $484 million more than last year; appropriate $2.45 billion for the Public Housing Capital Fund, which is $11 million more than FY08 funding; $4.5 billion for the Public Housing Operating Fund, which is $255 million more than FY08 funding; $3.64 billion for Community Development Block Grant formula allocations; and address the backlog of disability claims at the Social Security Administration by providing $709 million above 2008 for a total of $10.5 billion.

The House passed bill would spend $5.1 billion for tax enforcement efforts, which is $337 million more than last year, to help close the $290 billion tax gap and collect unpaid taxes.  The bill prohibits the Internal Revenue Service (IRS) from contracting out debt collection, which will ensure the IRS performs these functions at a lower cost and will better safeguard taxpayer data.

The House bill contains a moratorium on new contracting activities until the Obama Administration implements federal workforce policies.  It also restricts replacing federal employees with contractors and requires agencies to establish guidelines for bringing back in, or “insourcing”, functions contractors currently perform.

The spending bill now moves to the Senate, where debate is expected to begin next week.  The current stop-gap funding for this fiscal year expires on March 6.  

Economic Recovery Money Flowing to States and Local Governments

What is that whooshing sound you hear?  It is more than $15 billion of the $87 billion in increased Federal Medicaid Assistance Percentage (FMAP) flowing to states this week from the economic recovery package President Obama signed into law on February 17 (P.L. 111-5).  Counties that contribute to the state Medicaid share are receiving a portion of this money as well.  The most up-to-date information on what each state will receive for FMAP is available at http://www.hhs.gov/recovery/statefundsmap.html. 

In other areas as well, more precise information is becoming available about what new funding states and local governments will be receiving, and when they can expect to receive it.   The Department of Education has a web page dedicated to stimulus funding information at http://www.ed.gov/policy/gen/leg/recovery/index.html.  Funding at the school district level for Title I and IDEA (special education) is available at http://edlabor.house.gov/blog/2009/01/school-districts-will-benefit.shtml.   State funding levels for the Child Care and Development Block Grant (CCDBG), including set asides, is available at http://clasp.org/publications/arra_childcarestatealloc.pdf. 

Workers receiving unemployment insurance (UI) should see a $25 increase in their benefits beginning next week.  Federal funding will fully cover the administrative costs for implementing this benefits increase.  The temporary UI extended benefits program was extended until the end of 2009.  Workforce Investment Act (WIA) formula grant funds and additional Wagner-Peyser funds for the Employment Service we believe will be released in about three weeks.  Department of Labor guidance on implementation of Trade Adjustment Assistance (TAA) changes contained in the economic recovery bill will be issued in mid-May.

Within the next two months, the U.S. Department of Agriculture will allocate $145 million to state agencies for administering their Supplemental Nutrition Assistance Program (SNAP, formerly called Food Stamp Program).  A second allocation of $150 million will be made for FY 2010, which begins October 1.  The increased SNAP benefit will go into effect April 1.

 The Department of Housing and Urban Development (HUD) recently released new information detailing the state and local allocations of ARRA funding for HUD’s programs and key implementation issues.  You can find this information on HUD’s website at (http://www.hud.gov/recovery/).  Specifically, the amount of funding each Public Housing Authority will receive as its share of the national $3 billion stimulus appropriation for Public Housing Capital formula funding is available at http://www.hud.gov/recovery/capitalfund.xls.  The amount of funding each participating jurisdiction will receive as its share of the national $1 billion stimulus appropriation for the Community Development Block Grant formula funding is available at http://www.hud.gov/recovery/cdbg.xls

The Social Security Administration has announced that the one-time payment of $250 to individuals who receive Supplemental Security Income (SSI) or Social Security benefits should go out by late May.  Non-covered retirees are eligible for a refundable tax credit of $250 for 2009.

To help identify the federal stimulus funding that will go to individual states and localities, AFSCME created state-by-state fact sheets that list federal funding levels for key selected programs and briefly summarize the programs’ benefits.  They are posted on AFSCME’s website at: http://www.afscme.org/legislation-politics/20222.cfm in the section called "How Will Your State Be Affected?"

Additional state-specific information on implementation of the recovery bill is available at http://www.staterecovery.org/federal-assistance. 

White House Fiscal Summit

AFSCME President Gerald McEntee attended the bipartisan White House Fiscal Responsibility Summit on Monday, February 23.  The summit focused on broad fiscal challenges imposed by the national debt and the growing cost of entitlement programs.  Participants invited by the President included congressional leadership, high ranking Administration officials as well as a diverse group of economists, labor leaders and other budget experts.  Break-out sessions were held on health care, Social Security, taxes, budget and procurement.  President Obama presided over the wrap-up session where the points of earlier discussions were reviewed.  A follow-up session is planned on health care.  

Full Senate and House Panel Votes on D.C. Representation

The House Judiciary Committee approved its version of a D.C. voting rights bill (H.R. 157), legislation that would give full voting representation in the House to the District of Columbia.  After defeating a number of weakening Republican amendments, the measure was approved by a vote of 20-12.  In addition to giving D.C. a vote in the House, the measure would create an “at-large” seat for a new member from Utah. 

In the Senate, its D.C. voting rights legislation (S. 160) is moving forward, overcoming Sen. John McCain's (R-AZ) procedural challenge that could have killed the bill.  The McCain effort was defeated 36-62.  An amendment sponsored by Sen. John Ensign (R-NV) that would strike down D.C.'s gun ownership ban was adopted 62-36.   

Solis Confirmed as Secretary of Labor

By a vote of 80-17, the Senate confirmed the nomination of Rep. Hilda Solis (D-CA) to serve as Secretary of Labor.  Secretary Solis had a career voting record of 100% support for AFSCME’s congressional scorecard when she was in Congress.  We are confident she will serve President Barack Obama and American workers well in this position.  

GPO-WEP Repeal Bill Re-introduced in Senate

This week Sen. Dianne Feinstein (D-CA) re-introduced her Government Penison Offset (GPO)/Windfall Elimination Provision (WEP) repeal legislation (S. 484) with 10 original co-sponsors. GPO reduces or eliminates Social Security spousal and survivor benefits for retirees who collect pensions from jobs that were not covered by the program.  WEP cuts Social Security retirement benefits for individuals who are eligible for them in addition to pensions from non-covered jobs.  This is the companion bill to the Berman-McKeon repeal bill in the House (H.R. 235) which now has 180 co-sponsors.  AFSCME will continue to work to move this legislation forward. 

Workforce Investment Act Reauthorization Hearing Held

A House subcommittee held the second of two hearings this week on the Workforce Investment Act (WIA) and innovative approaches to job training in preparation for likely congressional consideration of WIA reauthorization.  The subcommittee also plans to hold field hearings.

Organized labor is advocating for a number of key priorities, including a stronger role for the state Wagner-Peyser system, increased labor participation in the planning process, labor-management training partnerships and a minimum percentage of WIA funds spent on training.  We have been and are continuing to meet with a wide variety of stakeholders in an effort to develop as much consensus as possible.  

Economists Support the Employee Free Choice Act

This week 38 economists endorsed the Employee Free Choice Act, stressing the bill would restore balance in the workplace, raise wages and improve working conditions. The endorsement is available at: http://www.epi.org/publications/entry/prominent_economists_call_for_passage_of_the_employee_free_choice_act/ 

Report Shows Uninsured Crisis Impacts Those With Coverage

A new report by the Institute of Medicine, American’s Uninsured Crisis: Consequences for Health and Health Care, outlines the expanding crisis as more workers lose their health insurance as the economy weakens, health care costs rise and fewer companies offer coverage.  The report found as communities see an increase in the number of uninsured, adults with health insurance in those communities are more likely to have difficulties obtaining needed health care and are less satisfied with the care they receive.  Even with the availability of some safety net services, those who are uninsured are more likely to face needless illness, suffering and even death.  For example, adults without health insurance are more likely to be diagnosed with later-stage cancers that are detectable with early screening and are more likely to die from trauma or heart attacks.  The report amplifies the imperative for affordable quality health care for all Americans. 

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