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Week Ending April 20, 2012

FY 2013 Budget Process Off to a Rocky Start

Fiscal Year (FY) 2013 funding decisions were set in motion in both the House and Senate this week. Senate Budget Chairman Kent Conrad (D-ND) held a hearing to produce a budget resolution, but no votes were held or planned.  Instead, he released a budget proposal based on the outline produced by Erskine Bowles and Alan Simpson, co-chairs of the President’s Commission on Debt Reduction. The Bowles-Simpson plan is not a new budget, and did not have the required support from the commission. It, also, was soundly rejected by the House in a floor vote during the debate on Budget Chairman Paul Ryan’s (R-WI) budget.  AFSCME opposes the Bowles-Simpson plan, which would cost the economy jobs, cut Social Security, and place the burden of deficit reduction on seniors, the middle class, and working families.

In further action, the House gave the go-ahead to its subcommittees tasked with making spending decisions to begin their work by officially setting, or “deeming,” the overall federal funding level at $1.028 trillion, $27 billion below the Budget Control Act (BCA) cap for non-defense annual funding agreed to last year. The deeming resolution passed on a party-line vote of 228 to 184. 

The Senate, however, disapproved of the House’s low spending numbers by setting its overall funding level at $1.047 trillion (in accord with the BCA). The Labor, Health and Human Services and Education Committee received just over a $2 billion increase from the current fiscal year. Appropriations Chairman Daniel Inouye (D-HI) noted that Congress has slashed spending $116 million, or 9.1%, over three years (15% when inflation-adjusted). He warned that “just like the average American family experiences rising utility costs, increases in college tuition, and increases in medical expenses due to inflation, so do our Federal agencies.” Most GOP appropriators, including Majority Leader Mitch McConnell (R-KY), supported the Senate’s funding levels. 

House Approves $46 Billion in New Tax Cuts for Businesses

The House voted 235-173 to approve $46 billion over 10 years in new tax cuts, which would benefit 99.6% of all U.S. businesses. The so-called “Small Business Tax Cut Act” (H.R. 9) would grant all qualified businesses with fewer than 500 employees a federal tax deduction for the lesser of 20% of taxable income or qualified domestic business income. AFSCME opposes the bill because it is not focused on job creation, disproportionately benefits the wealthiest Americans, and is not targeted. Instead, it delivers new tax subsidies regardless of a business’s income, assets, sector, or purpose. Worse, there is no requirement for a business receiving this tax break to increase employment and in fact, a business that reduces jobs would still receive the tax break. Despite the need to increase investment in job creation, education, the social safety net and infrastructure, this bill reduces federal revenues. And, 49% of this tax cut would benefit those with earnings over $1 million.

H.R. 9 passed largely along party lines, with only 10 Republicans voting against it and 18 Democrats voting for it. The Senate is unlikely to bring this legislation to the floor anytime soon. The Obama Administration strongly opposed the bill because it is not focused on cutting taxes for mom and pop small businesses and under its definition of income, many of the “small businesses” that would receive the largest tax breaks are hedge fund managers, law partners, consultants, and other wealthy individuals and corporations with the biggest profits. 

Senate Republicans Vote to Reject Tax on Millionaires

The Senate voted 51-45 to reject legislation (S. 2230) to implement the Buffett Rule, which would impose a 30% minimum tax on annual earnings over $1 million.  AFSCME strongly supported this legislation because it takes a key step towards ensuring that America’s highest earning 0.5% pay their fair share of federal taxes, makes federal taxes more progressive, and generates $46 billion over 10 years in additional federal revenues to invest in vital public services, infrastructure and job creation. Although a majority of senators voted for it, this procedural vote required 60 supporters to end debate. Only one Republican, Sen. Susan Collins (R-ME), voted for it; one Democrat, Sen. Mark Pryor (D-AR), voted against it. President Obama strongly supports both this specific bill and the broader Buffett Rule, and is making this tax fairness theme a central part of his presidential campaign. 

In the House, Rep. Tammy Baldwin (D-WI) introduced an identical bill (H.R. 3903), with 56 co-sponsors. The GOP leadership will not permit a floor vote on the measure. 

AFSCME Members Demand Congress Make Millionaires and Corporations Pay Their Fair Share

Tuesday was Tax Day, and AFSCME members around the country joined with other unions, community groups and faith organizations to demand that Congress pass legislation to make millionaires, billionaires and wealthy corporations pay their fair share to support vital government services and protect Medicare, Medicaid and Social Security. The House recently passed Budget Chairman Ryan’s budget proposal that makes massive cuts to Medicare and Medicaid while giving millionaires a $394,000 tax cut.

In Arkansas, AFSCME Council 38 members held a press conference outside the Veterans Affairs Hospital, which experienced service cutbacks due to lack of adequate funding. They urged Rep. Tim Griffin (R-AR) – who supported the Ryan Budget – to fight for middle-class families in his district instead of wealthy interests. In California, AFSCME Council 36 members joined with the California Labor Federation, retirees and “patriotic millionaires” in front of an IRS office in Sacramento to criticize Rep. Dan Lungren (R-CA) for supporting Ryan’s budget. In Iowa, AFSCME Council 61 members organized a rally outside an Iowa Workforce Development Office, closed last year by Gov. Terry Branstad, and urged Congress to pass “Buffett Rule” legislation that would require millionaires to pay the same tax rates as middle-class families. AFSCME members in Michigan and New York organized similar events, and more AFSCME members joined hundreds of actions across the country calling on Congress to make everyone pay their fair share. 

House Panels Approve Proposals Harming Access to Health Care, Social Services and Nutrition Assistance

This week, the House Ways and Means Committee approved three bills that will save $53 billion over 10 years.  Rather than increasing revenues from those who can afford to pay more, the first bill would substantially increase repayment charges for people who, under the health reform law, will receive subsidies to help them afford coverage and whose incomes increase during the year.  It is estimated that the prospect of having to pay a very large sum of money back to the IRS would cause 350,000 people to forego health coverage, jeopardizing health reform.  The second bill, approved on a party-line vote, could deny the child tax credit to working parents, mostly immigrants, who file taxes using an Individual Taxpayer Identification Number instead of a Social Security number.  This provision increases taxes on the families of more than 5.5 million poor and near-poor children, including 4.5 million children who are U.S. citizens.  The third bill, also passed on a party-line vote, would repeal the Social Services Block Grant, which provides funds to states for a myriad of priorities, including child care, foster care and adoptions, and services for seniors and people with disabilities.

The House Agriculture Committee approved a bill that would cut more than $33 billion from the Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps).   In addition to benefit cuts, the measure would eliminate a cost share to states for operating a SNAP employment and training program and would eliminate performance bonuses awarded to states for effective SNAP administration.  This would place new pressures on state and county SNAP offices that are already struggling to cope with staff shortages and burgeoning caseloads.  The GOP-led House Agriculture Committee chose to have 100% of its cuts come from SNAP, while the committee continues to protect farm subsidies at a time when producers are reaping record profits.

These provisions, along with others that will come from six other House committees, will be attached to a final House budget-cutting bill that is expected to be voted on in May.  AFSCME strongly opposed all of these measures, and will continue to do so as long as the House majority continues to target poor and working families for budget cuts while the wealthiest individuals and corporations are not required to contribute their fair share. 

House, Senate Panels Approve Conflicting Budgets for State and Local Law Enforcement

The two congressional panels tasked with providing funding for state and local law enforcement advanced conflicting budget proposals for FY 2013. The House panel’s budget breaks the agreement reached by the White House and congressional leaders on spending levels last August to prevent government default. Under the House bill, funding for the Community Oriented Policing Services (COPS) program would be $73 million — a 76% cut compared to FY 2012. COPS grants go directly to state and local law enforcement agencies for hiring additional officers and assisting in safety programs. The House bill also cuts the State Criminal Alien Assistance Program (SCAAP) – which reimburses states for the costs of incarcerating undocumented immigrants who have been detained – by 31%. Byrne Justice Assistance Grants (JAG), that assist state and local law enforcement agencies in carrying out and updating their justice programs, would be funded at the same level as FY 2012, $370 million, including $20 million for bulletproof vest matching grants.

The corresponding Senate committee took a much different approach, providing a total of $2.2 billion for grants to state and local law enforcement. This includes $248 million for the COPS program, an increase of almost 25%. Additionally, the Senate bill would provide $255 million for SCAAP and $392 million for Byrne-JAG grants (increases of 6% each) and includes $24 million for bulletproof vest matching grants. Congressional negotiators will have to resolve conflicting levels after individual bills are passed by the House and Senate. President Obama has stated he will not sign any bill that breaks the budget agreement reached last year

Transportation Bill Heading for House / Senate Negotiations

The House of Representatives passed legislation (H.R. 4348) this week that extends current surface transportation programs, setting up negotiations with the Senate. The Senate passed its bill (MAP-21) last month. H.R. 4348 would extend the current authorization until the end of the year, after the House was unable to pass its long-term surface transportation bill (H.R. 7). That bill contained controversial and divisive provisions, including several that were anti-labor, which AFSCME opposed.

The House bill also included the controversial Keystone XL oil pipeline. The bill passed 293 to 127, with 69 Democrats joining 224 Republicans in voting for the short-term extension. The Senate’s bill is a two-year extension, funded at $109 billion, which will create jobs and boost the economy. 

House Hearing Addresses Federal Tax Reform and Retirement Savings.

A House Ways and Means Committee hearing this week focused on options for retirement savings related to employer-based defined contribution plans and IRAs. The hearing addressed whether comprehensive tax reform could simplify, enhance efficiency, and increase retirement and financial security for Americans. AFSCME is concerned about efforts to undermine middle class pensions and retirement benefits – both defined benefit and defined contribution – by diverting existing federal tax incentives that encourage retirement savings to reducing corporate and individual federal income tax rates in ways that disproportionately harm working families and benefit the wealthiest 5%. Ranking Member Sander Levin (D-MI) said: “What should be clear is that the basic structure of our current system should be preserved, and that this structure should not be repealed to pay for tax reform.  Tax reform should approach retirement savings incentives with an eye toward strengthening our current system and expanding participation, not as an opportunity to find revenue.” AFSCME is monitoring this issue closely and opposes the weakening of defined benefit pension plans that benefit AFSCME members.

Reauthorization of the Workforce Investment Act

The House Education and the Workforce Committee held a hearing this week on legislation to reauthorize the Workforce Investment Act (WIA).  The bill (H.R. 4297) was introduced several weeks ago by committee Chairman Joe Klein (R-IA) and Rep. Virginia Foxx (R-SC). As expected, it repeals the Wagner-Peyser Act, which funds the state employment service, and merges the funds with the WIA adult, dislocated worker and youth programs into a block grant.  The bill caps funding for six years at current levels, which are well below the amounts available ten years ago and eliminates any guarantee that various groups of workers such as dislocated workers and veterans will receive even the current level of services.  H.R. 4297 also eliminates all labor participation on state and local workforce boards but requires that the membership of each board include business representatives.

By contrast, legislation (H.R. 4227) introduced by Reps. George Miller (D-CA), John Tierney (D-MA) and Ruben Hinojosa (D-TX) would retain the separate programs and strengthen both labor protections and labor representation on the workforce boards. The bill also adopts a pilot program, proposed by AFSCME, to strengthen the career counseling capacity of the state employment service and promotes labor-management partnerships, industry sector partnerships, and regional planning and service delivery. 

Organized labor sent a strong letter opposing H.R. 4297, which included AFSCME, the AFL-CIO, NEA, SEIU, the Building Trades and others.  

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