Week Ending February 3, 2012
Negotiations on Continuation of Unemployment Benefits Continue Slowly
Members of a joint House-Senate conference committee held two public meetings this week as they continued to debate differences in approaches regarding the details of legislation to continue the federal emergency unemployment benefits program, the middle class payroll tax cut, and reimbursement rates for doctors under Medicare. At issue were policy changes that would create new barriers for unemployed workers seeking federal extended benefits; whether and how to pay for all three major components of the bill; and whether to add additional provisions on other matters. A partisan divide exists concerning new unemployment insurance requirements, with congressional Democrats strongly opposed to policies proposed by congressional Republicans that would require workers to have a high school degree or be enrolled in a GED program and to submit to a drug test to qualify for unemployment benefits. In addition, Democratic members of the conference committee are pushing back against GOP proposals to reduce the number of benefit weeks. In a good faith gesture, Senate Democrats made an offer to the House GOP members of the conference committee that included some of the more moderate provisions in the House-passed bill regarding work search, reemployment services and overpayments of benefits, leaving the more extreme provisions unresolved.
While all members agreed on the need to continue both unemployment benefits in some form and the payroll tax cut for another year, the most difficult challenge will be reaching agreement on whether and how to pay for the legislation.
This discussion has not yet occurred in the conference committee’s public meetings. However, Democratic members have said that the cost of extending federal unemployment insurance benefits is emergency spending and therefore should not have to be offset. AFSCME agrees with this. And, we have made our view clear that any revenues needed to pay for this legislation should come from the most affluent Americans and corporations, not those who are economically vulnerable. We particularly oppose any offsets that would make health care less affordable and accessible, and any policy that would deny the child tax credit to citizen or immigrant children who are currently eligible.
Congress Begins Work on 2013 Budget
It's officially budget season in Washington, D. C. again. We know that it will be the first budget that operates under the caps imposed by the Budget Control Act (BCA), last year's attempt to resolve the debt ceiling and deficit fight with Tea Party extremists. Given these constraints, we can expect reduced spending to be proposed. The President has announced that his budget will be released on Monday, February 13. House Budget Committee Chairman Paul Ryan (R-WI) is then likely to release his budget proposal, including deep cuts to annually-funded domestic programs, Medicare, and Medicaid—just like last year. So, gear up to fight back! Senate Budget Chairman Kent Conrad (D-ND) also plans to pass a budget out of his committee.
While the regular budget process moves forward, the House Budget Committee has been busy proposing budget process changes. These changes, however, will not address the underlying problem; that tax revenues are too low to support critical program needs. Further, Congress is bitterly divided along partisan lines, and no amount of budget process changes can overcome that. Nevertheless, House committees have held numerous hearings on budget reforms recently and this week the House passed, by party-line votes, the Pro-Growth Budgeting Act of 2011 (H.R. 3582) and the Baseline Reform Act of 2011 (H.R. 3578). H.R. 3582 would require the use of gimmicks to hide the harmful impact of tax cuts on the budget and make it very difficult to ensure that corporations and the wealthy are paying their fair share in taxes. H.R. 3578 would remove inflation from the baseline Congress uses to project its budget. This budget gimmick would project unrealistically low levels of funding required for important health, labor, education, transportation, infrastructure and all other programs, and make tax cuts appear more affordable than they really are. It also sets up a dangerous opportunity for budget projections to dip below the already low spending caps and characterize any inflation-adjusted levels as "spending increases."
Neither H.R. 3582, H.R. 3578, nor any other proposed budget process reform would create a single job or improve our economy. In fact, these bills would misrepresent critical program needs and add to the difficulty of ensuring that corporations and the wealthy pay their fair share in taxes. The House is likely to continue to vote on these duplicitous bills throughout the budget season.
House Committee Approves Surface Transportation Bill
At what is being called the longest markup in its history, the House Transportation and Infrastructure Committee approved the American Energy and Infrastructure Jobs Act (H.R. 7) by a vote of 29-24 on February 2. The long-awaited surface transportation bill would provide $260 billion over five years to fund highway and transit programs. The legislation marks a strong departure from what has historically been a bipartisan bill. The bill is full of incentives for local governments to comply with a federal directive to privatize public transportation. Democrats on the committee offered many amendments to improve the bill, but most failed on party-line votes.
AFSCME has many concerns with the legislation, including a section of the bill that would directly harm members who perform engineering and design services at state departments of transportation. The provision would mandate that engineering and design services be privatized. An amendment to strike this section of the bill was offered by Reps. Donna Edwards (D-MD), Mazie Hirono (D-HI) and Michael Capuano (D-MA). It failed by voice vote. Another AFSCME-supported amendment offered by Rep. Russ Carnahan (D-MO) also failed. That amendment would have given local transit agencies the flexibility to use federal funds to provide operations and maintenance, particularly important during an economic downturn.
The 800-page bill was made available to committee members just one day before the markup, prompting criticism of the process as well as content. Secretary of Transportation Ray Lahood issued a statement calling the legislation the “worst transportation bill” he has seen in decades.
House Votes to Extend Pay Freeze for Federal Workers
The House on Wednesday evening, by a vote of 309 to 117, approved a GOP proposal to extend the pay freeze for federal workers for a third straight year (through 2013), and put members of Congress on record as opposing a boost to their own $174,000 salaries. Cleverly, as the House GOP leadership structured the bill, a vote against the pay freeze would also have been a vote in favor of raising congressional salaries. The bill aims to build support for the pay freeze as a way to help pay for the year-long payroll tax holiday. The White House has called for federal workers to receive a slight raise of 0.5% next year. Democrats used the debate to note that federal workers are already in the midst of a pay freeze. “It’s not as if the federal employees haven’t tightened their belts,” said House Minority Whip Steny Hoyer, “they have.” The bill now moves to the Senate where its prospects are unclear.
Proposed Rule to Give Home Care Workers Respect and Dignity Under Attack
For decades, federal law has treated home care workers as casual baby sitters. They have been denied basic federal minimum wage and overtime protections because, historically, they’ve been regarded as just “companions.” AFSCME has fought to correct this injustice. President Obama and Labor Secretary Hilda Solis have proposed new Fair Labor Standards Act rules that would ensure that these workers are treated fairly. The rule requires public comment before it is finalized.
The proposed rule is now under fire. Opponents are flooding the Department of Labor (DOL) with negative comments and lobbying their friends in Congress with a barrage of lies. We cannot let the rule go down. The comment period closes February 27. The most important action you can take is to submit your comment. It can be as simple as “Please adopt the new FLSA rule” or “The federal FLSA rule should recognize the value and dignity of home care work, and clearly hold employers – including public agencies – accountable for treating these workers fairly.” Home care members who are commenting may want to add “I work in the (name of home care program) and I should have rights like other workers.”
Home care workers perform back-breaking work to care for individuals with disabilities due to age or illness. These workers are the lifeline of independence for their consumers. It is time to value these workers. They deserve the minimum wage and hours of work protections afforded to other workers.
Congress Close to Approving Aviation Bill
After months of intense negotiations and 24 extensions, the Senate and House have completed negotiations on a Federal Aviation Administration (FAA) Reauthorization bill. The final bill was approved by the House on February 3 by a vote of 248-169. The Senate is scheduled to vote on the measure next week. Congress’ inability to resolve several controversial issues in the bill last summer resulted in the shut-down of the agency last year and the furloughing of 4,000 employees.
Senator Whitehouse Introduces “Buffett Rule” Legislation to Ensure High Earners Pay at Least 30% Federal Tax Rate
On February 1, Senator Whitehouse (D-RI) introduced “Paying a Fair Share Act” (S. 2059), which would phase in a 30% minimum tax rate on millionaires so that those with incomes exceeding $2 million annually would pay at least 30% of their income in federal income taxes. Senator Whitehouse estimates this would increase annual federal revenues by $40 billion to $50 billion. S. 2059 follows through on a similar proposal in President Obama’s recent State of the Union address. He proposed the so-called “Buffett Rule”, named after billionaire Warren Buffett, who advocates that wealthy earners pay higher federal tax rates than their secretaries and other lower income earners. Both Whitehouse and Obama’s proposals address existing tax loopholes, which allow millionaires and billionaires to pay lower effective federal tax rates than middle-class working families. AFSCME strongly supports a “Buffett Rule” policy and S. 2059.
House Votes to Repeal Long-Term Care Insurance Program
By a vote of 267 to 159, mostly along party lines, the House passed legislation (H. R. 1173) to repeal the long-term care insurance program that was an important provision in the Affordable Care Act. The Community Living Assistance Services and Supports (CLASS) program would establish a national insurance program for workers who become functionally disabled. The new insurance is to be financed through voluntary payroll deductions and provide benefits for supports and services to workers to help them stay independent, employed and remain in their communities. The law required that the Administration ensure the benefit design was funded solely from participants, appealed to a broad group of American workers, including younger workers, and be financially solvent for at least 75 years. Unlike most private plans, a prime feature of the CLASS program was that pre-existing medical conditions would not disqualify someone from enrolling.
The Secretary of the Department of Health and Human Services suspended work on implementing CLASS because of the challenges in meeting these legal requirements. While recognizing that the CLASS program needs changes to improve its financial success, AFSCME opposes repeal. With a growing aging population, enabling middle-class families to afford long-term care is urgently important. Medicare and private health insurance programs do not pay for the majority of long-term care services, such as personal care assistance (i.e. bathing, dressing, and eating). Medicaid does cover long-term care, but middle-class Americans must impoverish themselves in order to be eligible. Repeal of the CLASS program offers no solution. “The CLASS program is not perfect, but it can be used as a framework for repairing and fixing the program,” Rep. Lois Capps (D-CA) argued during the Feb. 1 House debate.
Closing Tax Loophole Could Save Taxpayers Money and Help Medicare
Rep. Pete Stark (D-CA) introduced the Narrowing Exceptions for Withholding Taxes (NEWT) Act (H.R. 3840), which would strengthen Medicare by closing a contribution loophole. The NEWT Act would no longer allow high income self-employed individuals to evade paying their fair share of Medicare payroll taxes by misclassifying wages as profits or dividends. In 2010, Former Speaker Newt Gingrich (R-GA) reported to the IRS $444,327 of his earnings as wages from Gingrich Holdings, Inc. and Gingrich Productions. By classifying another $2.4 million as profits or dividends, he avoided paying an estimated $69,000 in Medicare taxes. The NEWT Act would save taxpayers $11.2 billion over ten years by closing this loophole. At a time when the House GOP leadership has pushed to shift costs to Medicare beneficiaries and raise the age of Medicare eligibility to reduce the deficit, this proposal offers a sensible and fair approach to save taxpayer funds by ensuring that high wage earners contribute their share to fund Medicare.
Affordable Care Act Helps 3.6 Million Medicare Beneficiaries Save $2.1 Billion in 2011
For more than four decades, Medicare has been a resounding success in providing access to medical services and reducing the financial burden of health care for senior citizens and other beneficiaries. The Affordable Care Act strengthens Medicare for the millions of Americans who rely on it. New data shows that nearly 3.6 million Medicare beneficiaries saved $2.1 billion on their prescription drugs in 2011. Women especially benefitted from the law’s provision, with two million saving $1.2 billion on their prescription drugs. The average Medicare beneficiary will save nearly $4,200 by 2021 because of the new health care law. The Affordable Care Act provides a 50% discount on brand-name prescription drugs and, this year, a 14% discount on generics. Last year, it provided a 7% discount on covered generic medications for people who hit the prescription drug coverage gap known as the donut hole, with almost 3 million beneficiaries receiving $32.1 million in savings on generics. This help for Medicare recipients would disappear if the Affordable Care Act were repealed.
View the fact sheet for state-by-state savings.
New Affordable Care Act Rule Will Save Medicaid Prescription Drug Costs
The U.S. Centers for Medicare and Medicaid Services announced a new rule that will save states and the federal government $17.7 billion over five years in prescription drug costs under the Medicaid program. The savings to states will total about $4 billion, while the savings for the federal government will total $13.7 billion. Under the rule, the price paid by Medicaid for prescription drugs will be based on the cost paid by local pharmacies, rather than often-inflated price lists from prescription drug manufacturers.
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