Week Ending February 26, 2016
Supreme Court Vacancy
The sudden death of U.S. Supreme Court Justice Antonin Scalia presents a new conflict in Washington as President Obama fulfills his constitutional obligation to nominate a successor. Justice Scalia’s death not only threw into uncertainty a significant number of controversial, high stakes cases, including Friedrichs v California Teachers Association, but it also raises the possibility of a constitutional crisis. Within hours of the news, GOP leaders in Congress demanded that President Obama leave the nomination for the next president. Still others said the Congress would not even hold hearings on any nominee from the sitting President. Eleven Republicans on the Senate Judiciary Committee, which has oversight of judicial nominations, signed a letter to pledge no hearings on any replacement for Scalia until a new president is inaugurated. House Minority Leader Nancy Pelosi (D-CA) and others slammed Senate Republicans over their refusal to even consider President Obama's nominee, especially before anyone has even been named. Pelosi said: "Republicans' contempt for functioning government and their disrespect for the president knows no bounds."
President Obama made it clear it is his duty to make an appointment and he expects Congress to do its job. Obama said: “The Constitution vests in the President the power to appoint judges to the Supreme Court. It’s a duty that I take seriously, and one that I will fulfill in the weeks ahead.” Further, he said: “As Senators prepare to fulfill their constitutional responsibility to consider the person I appoint, I hope they’ll move quickly to debate and then confirm this nominee so that the Court can continue to serve the American people at full strength.” This view was backed up by a group of 33 constitutional law scholars and legal experts who sent an open letter to President Obama and the U.S. Senate leadership urging them to fulfill their constitutional duties with regard to the vacancy on the Supreme Court. Senate Democrats also made a public call of their own for hearings. "The court needs nine justices to function properly. It is vital to our judicial system. So Republicans, we say this, just do your job. Just do what you're sent here to do," said Sen. Dianne Feinstein (D-CA), a senior member of the Judiciary Committee.
AFSCME’s Federal Government Affairs Department is working with a broad coalition of progressive allies on the nomination process asking Congress to do its job and consider the President’s nominee by holding a hearing and voting on the appointment. To sign the petition, please go to: www.AFSCME.org/scotus.
Senators Work to Provide Aid to Alleviate Flint Water Crisis
In an effort to provide much-needed assistance for water infrastructure and health monitoring for Flint, Michigan residents due to lead contamination of the water supply, a group of senators agreed upon an assistance package totaling over $800 million, the bulk in loan guarantees. The group – Sens. Debbie Stabenow (D-MI), James Inhofe (R-OK), Gary Peters (D-MI), Rob Portman (R-OH), Sherrod Brown (D-OH), Mark Kirk (R-IL), Jack Reed (D-RI), Richard Burr (R-NC), Richard Durbin (D-IL), and Barbara Boxer (D-CA) – want their package, the Drinking Water Safety and Infrastructure Act, to be included in the energy bill currently before Congress (S. 2012). The proposal would provide $22 million in debt relief for obligations Flint owes the state of Michigan, as well as $100 in immediate water infrastructure and health monitoring grants. The aid package also contains $700 million in loans to improve water systems including and beyond Flint.
Against local resident and lawmakers’ demands, Republicans in Congress demanded that aid to Flint must be paid for, through budget cuts elsewhere, denying that Flint’s toxic water constitutes an emergency. AFSCME strongly disagrees and will continue to urge Congress to provide immediate aid on an emergency basis, as would be the case in a natural disaster. The bipartisan package would be paid for by giving up funding for another critical program for Michigan’s transportation and infrastructure, Advanced Technology Vehicles Manufacturing (ATVM) loans issued after October 1, 2020.
This initial funding package should only be a first step in a long-term effort to get Flint the help it needs and to prevent such crises from occurring elsewhere due to lack of proper infrastructure investment.
Fiscal Year 2017 Budget Process Slows Down
This week the House Budget Committee was scheduled to vote on its fiscal year (FY) 2017 budget proposal. The timeline was delayed to mid-March to allow additional time for the Budget Committee to identify $30 billion in spending cuts that House conservatives are demanding in retaliation for lifting the budget caps in last year’s Bipartisan Budget Act (BBA). These are enormous cuts and would devastate many domestic programs, including Social Security, Medicare, Medicaid, and the Supplemental Nutrition Assistance Program (SNAP). The delay gives House Republicans time to find consensus and suggests that it may not be possible for the House to produce a budget this year. If that is the case, it is unlikely the Senate will pass its own budget proposal.
In fact, a budget is not necessary. The BBA already includes funding levels for defense spending and domestic programs for FY 2017, which is all that the Appropriations Committee needs to distribute allocations to each of the 12 funding subcommittees.
Appropriations subcommittee hearings started this week, with federal agency officials presenting the President’s budget request and fielding questions about specific programs. When Secretary of Health and Human Services (HHS) Sylvia Burwell testified before the House Appropriations Subcommittee on Labor, Health, Human Services and Education, full Committee Ranking Democrat Nita Lowey (D-NY) pointed out that the $201 million request for additional funding for the Child Care and Development Block Grant (CCDBG) is very much needed but insufficient. Subcommittee Ranking Member Rosa DeLauro (D-CT) noted with respect to the Flint water crisis that it is “imperative that we resolve this crisis immediately and provide the health and education interventions these children and families will need going forward.” She also asked HHS to explore expanding Head Start to all eligible children in Flint. (
Two Congressional Hearings Address Puerto Rico Fiscal Crises
Two house committees held hearings this week to address Puerto Rico's fiscal crises. The House Committee on Natural Resources held a hearing on February 25 where only Antonio Weiss of the Treasury Department testified. He highlighted Puerto Rico’s massive $70 billion debt and related expected imminent defaults, and the urgent need for immediate congressional action to avoid a humanitarian crisis, years of protracted litigation, and economic instability for Puerto Rico
(To view the testimony go to: http://naturalresources.house.gov/uploadedfiles/testimony_weiss.pdf)
Weiss also urged Congress to enact legislation combining authority for Puerto Rico to restructure its debt with independent fiscal oversight. This restructuring would not be related to Chapter 9 bankruptcy provisions currently permitted under certain conditions for mainland municipalities but not states. Weiss also mentioned increased federal financial assistance through Medicaid, earned income tax credit (EITC), and other pro-growth provisions, but emphasized that while enhancing Medicaid and EITC benefits in Puerto Rico at parity with the 50 states would help future economic growth, the more immediate and pressing need was debt restructuring.
On pensions for public sector workers, including many AFSCME members, Weiss said: “We are deeply concerned that they be protected.” After he was asked if anything should be sacrosanct, he mentioned Puerto Rico’s self-governance and said “we would not want to put at risk the payments that are due to pensioners.”
The House Committee on Financial Services also held a hearing on Puerto Rico and the impact on bond markets. In the view of most stakeholders, including AFSCME, the Treasury Department, bond rating agencies, and many bond holders, the best option for Puerto Rico’s creditors, broader markets, and residents is to enact appropriate restructuring authority as soon as possible. Given that Puerto Rico already announced it cannot pay its debts, it is now frozen out of capital markets, additional large defaults are looming, and the risk of default exceeds any downside from restructuring. Bond markets are generally forward looking. In the past, financial crises like those in New York City and Washington, DC, did not have long-term negative effects.
In anticipation of these hearings, numerous Democratic House leaders, including Minority Leader Pelosi and Whip Rep. Steny Hoyer (D-MD) urged House Republicans to begin bipartisan negotiations on federal assistance to Puerto Rico. They noted that this past week, Puerto Rico's government announced it doubted its ability to operate in the long term. Leader Pelosi declared: “Only Congress can empower Puerto Rico with the meaningful tools to restructure its public debt and restore the economic stability necessary to create jobs and a brighter economic future. I urge my Republican colleagues to act expeditiously in enacting a comprehensive and bipartisan solution that brings urgent relief to the people Puerto Rico.”
Undocumented Immigrants Contribute to State and Local Governments’ Revenues
Undocumented immigrants living in the U.S. collectively pay an estimated $11.64 billion annually in state and local taxes according to a report released this week by the Institute on Taxation and Economic Policy. The report, Undocumented Immigrants’ State and Local Tax Contributions, found that the average tax contributions of undocumented immigrants equal 8% of their income, while the top 1% of taxpayers pay an average effective tax rate of just 5.4%.
Federal immigration reform to bring undocumented immigrants out of the shadows would enable immigrants to contribute even more in state and local tax revenues. If all undocumented immigrants were granted legal status and work authorization, their state and local tax contributions would increase by an estimated $2.13 billion a year. If President Obama’s 2012 and 2014 executive actions are upheld and fully implemented, the tax contributions of the more than five million undocumented immigrants who would be eligible for temporary legal status would increase by an estimated $805 million.
While the report focused on the impact of immigration policy changes on state and local revenues, the authors note that their findings mirror those at the federal level. Full immigration reform would decrease the federal deficit and generate more than $450 billion in additional federal revenue over the next decade, according to a 2010 report from the nonpartisan Congressional Budget Office. And, the President’s executive actions are projected to have positive effects on labor market growth and productivity, as well as wages and economic growth according to both the White House Council of Economic Advisors and the Center for American Progress. To view the full report, including state-specific data, click on link: www.itep.org/immigration.
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