Issues / Legislation » Legislative Weekly Reports

Week Ending February 7, 2014

Senate GOP Again Blocks Consideration of Legislation to Restore Federal Unemployment Benefits

Senate Republicans have again blocked consideration of legislation to restore the federal Emergency Unemployment Compensation (EUC) program, which expired December 28. An effort by Majority Leader Harry Reid (D-NV) and Senator Jack Reed (D-RI) to move forward on a three-month extension that accommodated some GOP concerns failed by one vote to reach the necessary 60 votes needed to proceed with debate on the legislation. Since the EUC program expired, the number of workers who have abruptly lost their benefits has risen from 1.3 million to 1.7 million. Each week that Congress fails to extend the EUC program, another 72,000 workers lose unemployment benefits as they continue to look for employment in a very difficult job market.

Senate Follows the House in Approving Farm Bill

The Senate this week voted 68-32 to pass the farm bill compromise. As reported last week, the legislation reduces Supplemental Nutrition Assistance Program (SNAP) spending by $8 billion over 10 years and establishes a new program of work pilot projects in place of the onerous work requirements the House approved last September. The legislation now goes to the White House where President Obama will sign the bill into law, ending a two-year effort to reform and renew both farm programs and SNAP.

GOP Leaders Hold Back on Lifting Debt Ceiling While the Deficit Continues to Fall

The spending agreement reached in October, following last fall’s government shutdown, increased the debt ceiling until February 7. The Treasury Department has stated that extreme measures can be used to continue payments for government debts but only until late February. At that point, the debt ceiling must be raised or the government risks default. House Speaker John Boehner (R-OH) said no decisions have been made about any changes in policy that the GOP would demand in exchange for a vote to raise the debt limit. During Obama’s presidency, GOP leaders have attempted to force additional spending cuts and the repeal of all, or parts, of the Affordable Care Act in exchange for preventing default. Following public disapproval of the fall government shutdown, and uncertainty over whether the federal government would pay its debts, the GOP leadership seems less willing to risk the financial and political repercussions of hostage taking.

Recent proposed policies to tie to the debt ceiling include repealing the cut in the cost-of-living adjustments for younger military retirees that was included in the budget deal passed in December and a pension adjustment that would allow corporations to reduce deductible pension fund contributions. The President continues to insist he will not negotiate over lifting the debt ceiling.

The demand to hold the debt ceiling hostage until Congress makes further budget cuts makes  less sense than ever as the Congressional Budget Office reported this week that the projected fiscal 2014 deficit will be $46 billion less than estimated last May and 24% lower than the 2013 deficit.

House Republican Leaders Wage New Attack on the Affordable Care Act

House Republican leaders have recently started a new attack on the Affordable Care Act (ACA), claiming that it provides “bailouts” to insurance companies. Legislation to repeal the so-called bailouts has been introduced by Sen. Marco Rubio (R-FL) and Rep. Tim Griffin (R-AR). It is likely that we will see Rep. Griffin legislation’s (H.R. 3541) move forward in the House soon. Such a bill would hurt consumers by increasing premiums for coverage purchased through health exchanges and boost the federal deficit.

The ACA includes measures designed to help insurers manage financial risk as they adjust to new prohibitions on discriminatory practices such as refusing to cover those with pre-existing conditions or dropping people when they get sick. As plans make the adjustment, some could end up with a greater share of sicker, more costly, consumers than other plans. Therefore, the ACA includes a temporary measure that provides a government subsidy to insurers with losses exceeding a certain threshold, while also requiring payments to the government from insurers with gains that exceed a certain threshold. By limiting the downside risk over a three-year period, the measure is aimed at reducing financial uncertainty, increasing competition and keeping premiums lower for consumers.

The temporary measure, known as a risk corridor, is modeled on a similar feature of the Medicare drug law. While designed to be budget neutral, the CBO now estimates that the so-called bailout will actually generate $8 billion in revenue for the federal treasury.

Debate Over Impact of the Affordable Care Act on the Labor Market

On Tuesday, the CBO issued new estimates on the impact that the ACA will have on the labor market. The CBO report has been widely covered in the media, but often in a way that mischaracterizes its conclusions. 

The CBO estimates that there will be a decline in the number of hours worked because some workers will choose to leave their jobs or work fewer hours. Because workers are now able to obtain health coverage apart from their employers through exchanges, some will decide to retire early, start their own business or work part-time rather than full-time. The CBO estimates that there will be a decline of hours worked equal to 2.5 million full-time workers by 2024.

Contrary to some media reports, the drop in hours worked is not due to a loss of jobs, “but almost entirely because workers will choose to supply less labor.” Moreover, the CBO projects that the ACA will “boost overall demand for goods and services over the next few years.” Responding to a question in a House Budget Committee hearing, the CBO director agreed that such an increase in demand will increase jobs and reduce unemployment over the next few years.

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