Week Ending December 14, 2012
Fiscal Cliff Saga Continues
House Speaker John Boehner (R-OH) has instructed House members to be prepared for a possible continuation of the lame duck Congress right up until the new year since no agreement has been reached on end-of-the-year budget and tax issues. According to the latest reports, President Obama and Speaker Boehner met late in the week but reached no agreements after an earlier exchange of a second set of proposals to solve the fiscal cliff impasse. Few details are known about the new plans but they apparently reflect little change from the original outlines. Tensions remain very high, and while both sides are still talking, they appear to have come close to a total breakdown. Many in Congress are now expressing real concern about running out of time to finalize a deal and still be able to get it drafted and passed before the end of the year.
The two major areas of contention remain how to raise new revenues and what, if any, cuts in spending programs would be part of the deal. There are also a number of other issues still on the table, including the end of the year automatic budget cuts known as “sequestration,” changes to the Alternative Minimum Tax (AMT), and extensions of the debt ceiling and unemployment insurance (UI) benefits.
Disagreement over whether to include an extension of the federal debt ceiling, something President Obama wants in order to prevent a repeat of last year’s decrease in the U.S. credit rating, is also proving to be contentious. In the area of revenue, President Obama continues to say he will not agree to any package that does not include raising the rates on the richest 2 percent – those individuals with income above $200,000 and families above $250,000. Also at issue is whether Obama’s goal of $1.6 trillion in new revenues can be achieved. Concern remains that without significant new revenues the door will be opened to deeper domestic spending cuts, including possible cuts in Medicare, Medicaid and Social Security, which AFSCME strongly opposes. There are some reports that most cuts to Medicaid might be off the table, preventing harm to beneficiaries and states. However, the most damaging proposals advanced in the Boehner plan include raising the Medicare eligibility age to 67, imposing means-testing, or increasing out-of-pocket costs for beneficiaries. Also of concern, the Boehner plan calls for reducing the Cost of Living (CPI) adjustment formula for Social Security, veterans and other benefits. Many members of Congress are speaking out on these specific changes. House Democratic Leader Nancy Pelosi (D-CA), in particular, said she is against raising Medicare’s eligibility age as part of a year-end tax and spending package, and according to reports, the President will not agree to GOP demands to increase the Medicare eligibility age. Others have voiced similar opposition to any cuts in Social Security.
President Obama, Members of Congress Speak Out Against “Right-to-Work” in Michigan
On Wednesday, Michigan’s governor Rick Snyder signed right-to-work legislation after the GOP- controlled legislature rushed the bills to his desk without any committee or public hearings during the state’s lame-duck legislative session. Snyder had initially opposed the legislation as too divisive for Michigan.
President Obama visited Detroit Monday to talk to Daimler workers about the current “fiscal cliff” negotiations, laying out his plan to make the wealthy pay their fair share and fight for working families by protecting critical programs like Medicare, Medicaid and Social Security. While there, he voiced his opposition to right-to-work laws: “These so-called right-to-work laws, they don’t have to do with economics, they have to do with politics. What they’re really talking about is giving you the right to work for less money.”
Earlier on Monday, Democrats in Michigan’s congressional delegation met with Snyder, urging him not to sign right-to-work legislation. “As we face nationally a fiscal cliff, and now face a Michigan cliff, if the right-to-work law passes, the governor will allow us to plunge into endless controversy,” said Rep. Sandy Levin (D-MI).
Added Sen. Debbie Stabenow (D-MI): “We’re the place where the middle class began because of our industry, our ability to make things and the ability to have good wages and working conditions, and all that has come with collective bargaining in Michigan.”
Members of Congress from other states have also voiced public opposition to Michigan’s right-to-work law, including Senate Majority Leader Harry Reid (D-NV), House Minority Leader Pelosi, Minority Whip Steny Hoyer (D-MD) and others.
Comprehensive Immigration Reform Teed up for Early Next Year
President Obama and members of Congress on both sides of the aisle have begun discussions and made public statements about congressional action on immigration reform early next year. He has been very clear that he is committed to working with Congress in early 2013 to advance a comprehensive bill that would include a path to citizenship for the 11-12 million undocumented immigrants currently residing in the U.S. His administration is also committed to ensuring that no foreign workers are brought into our country if U.S. workers are available, and that the wages and working conditions of both U.S. and foreign workers are protected.
In the Senate, a “Gang of 8” – with an equal number of Democrats and Republicans – has formed to attempt to agree on a bipartisan framework for immigration reform. The members are Sens. Chuck Schumer (D-NY), Dick Durbin (D-IL), Robert Menendez (D-NJ), Michael Bennet (D-CO), Jeff Flake (R-AZ), John McCain (R-AZ), Lindsey Graham (R-SC), and Mike Lee (R-UT). A bipartisan group to discuss immigration reform has formed in the House as well, but the membership has not been made public. We expect that immigration reform will be front and center next year after the so-called fiscal cliff tax and related budget issues are resolved.
President Obama Requests $60.4 Billion for Hurricane Sandy Relief
On December 7, President Obama requested $60.4 billion to fund recovery and mitigation of damage resulting from Hurricane Sandy. These funds address a wide variety of problems afflicting vital public services, public infrastructure, and private property and would flow through many different federal agencies. On December 12, Senate Democrats introduced a similar spending package totaling $60.4 billion. There is strong bipartisan support from the congressional delegations of the most affected states, including New York, New Jersey, and Connecticut. House Democrats also intend to propose a tax package, which would help the recovery and rebuilding effort.
Senate and House leaders are considering next steps amidst the continuing congressional focus on fiscal cliff issues. The Senate is expected to vote on their Hurricane Sandy bill before the House acts. While GOP calls to offset this disaster relief with spending cuts is waning, some conservatives want to reduce the spending package’s cost. Proposals include delaying some spending until future years, reducing the total $13 billion for mitigation funding, or imposing relatively high state matching funds to receive federal assistance. Supporters are highlighting the importance of full funding now to ensure that the planning, development and rebuilding process will go smoothly. AFSCME strongly supports the $60.4 billion funding request and is working to help advance it.
Study Finds Raising the Age of Eligibility for Medicare Would Leave 435,000 Seniors Without Coverage
A recent study by the Center for American Progress estimated that raising the eligibility age for Medicare to 67 would place almost 435,000 seniors at risk of becoming uninsured. These seniors would fall through the cracks in the current health care system because they live in states that rejected the Medicaid coverage expansion and would not be able to purchase affordable private individual coverage. Half of the seniors losing Medicare coverage under an increased eligibility age would pick up employer-sponsored coverage. This shift in coverage for older and less healthy employees and retirees would increase costs for employers and raise premiums for all other employees.
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