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Week Ending January 9, 2015

Week Ending January 9, 2015

New 114th Congress Convenes

The 114th Congress convened this week and started with the election of leaders. While there was little doubt about the eventual outcome, as House and Senate leaders were reelected, deeper than anticipated drama occurred in the race for House Speaker. Incumbent Speaker John Boehner (R-OH), who won with 216 votes, 11 more than needed, was forced to turn back aggressive opposition from conservative members as 25 House Republicans voted against him, more than double the 12 who did so two years ago.

Rep. Walter Jones (R-NC), who voted for Rep. Daniel Webster (R-FL) for Speaker, said: “The American people are very upset by this leadership.” Boehner exacted swift retribution against those who opposed him when he kicked off Webster and Rep. Richard Nugent (R-FL) from the prestigious House Rules Committee, which controls what bills are considered on the House floor. Other Boehner opponents complained of similar retaliation when he removed them from other committees.

Rep. Nancy Pelosi (D-CA) received 164 votes and will continue as Democratic Leader in the House. Just four Democrats voted against her: Reps. Jim Cooper (TN), Dan Lipinski (IL), Gwen Graham (FL) and Kyrsten Sinema (AZ). With the new GOP majority in the Senate, Mitch McConnell (R-KY) took over as Majority Leader and Harry Reid (D-NV) as Democratic Leader. In his new role setting the Senate’s agenda, McConnell announced his intention to move to early votes on the Keystone XL pipeline, followed by efforts to weaken the Affordable Care Act’s employer responsibility requirements.

House Passes Rules Package Which Threatens Social Security Disability Insurance and Distorts Harmful Impact of Tax Cuts

Less than 24 hours into the new 114th Congress, the House passed a package of rules changes that include making the transfer of funds between the Old-Age and Survivors Insurance (OASI) Trust Fund and the Social Security Disability Insurance (DI) Trust Fund more difficult. This “reallocation” between trust funds has been a non-controversial, routine process that has been used 11 times before.  With the new rule change sponsored by Rep. Tom Reed (R-NY), future reallocations must create new revenue or cut Social Security benefits to current and future seniors, widows, disabled workers or children. “This rule change will have the effect of holding the DI trust fund hostage, and is a direct attack on seniors, disabled Americans and the Social Security trust fund,” said Barbara Easterling, president of the Alliance for Retired Americans. AFSCME and other progressive organizations strongly oppose this rule change.

The rules package also includes a new House rule that directs the Congressional Budget Office (CBO), where practicable, to estimate costs of major legislation with so-called “dynamic scoring” which would mask tax cuts’ true long-term costs.  This would ease the path of a costly comprehensive tax reform package, which is expected to emerge later this year.  AFSCME and most mainstream economists oppose this approach.  The White House also opposes this change and its Budget Director stated: “Congress should not adopt changes in scoring legislation [determining its costs] that upend the level playing field that has existed for decades, and could call into question the accuracy, consistency, and fairness of CBO and Joint Committee on Taxation budget estimates.” On a related note, GOP leaders reportedly have decided not to retain the current CBO director and they seek to appoint someone who supports dynamic scoring.

House of Representatives Starts the New Year with Vote to Weaken Affordable Care Act (ACA)

In one of their first acts in the new Congress, House GOP leaders put forth a bill (H.R. 30) that effectively eliminates the employer responsibility requirements in the Affordable Care Act.  Rather than strengthening employer-based coverage, H.R. 30, sponsored by Rep. Todd Young (R-IN), would undermine it.  The bill was approved largely along party lines by a vote of 252 to 172, with all Republicans voting for the bill and all but 12 Democrats opposing it. 

Under current law, employers with 50 or more workers are required to provide health coverage to employees who work 30 or more hours per week, or pay a penalty that helps subsidize tax credits for workers who purchase their own coverage in a health care exchange.  Under H.R. 30, employers would be required to provide coverage or pay a penalty for employees working 40 or more hours per week, rather than 30. This change would give employers an incentive to reduce the hours of full-time workers in order to avoid any responsibility for health coverage.  According to an analysis by researchers at the UC Berkley Center for Labor Research and Education, increasing the threshold from 30 to 40 hours would result in lost work hours for 6.5 million workers.  The CBO estimates that the bill would cause one million people to lose their employer-sponsored health coverage. 

Senate GOP leaders have stated they will consider H.R. 30.  It is likely to be on the Senate floor later this month.

President Obama Unveils Plan to Make Community College Free and to Expand Technical Training Programs

In a speech at a Tennessee community college today, President Obama announced a new initiative, America’s College Promise, that would allow students to attend community college for free, saving a full-time community college student $3,800 per year on average and benefiting roughly 9 million students each year.  To be eligible, students must attend community college at least half-time, maintain a 2.5 GPA, and make steady progress toward completing their program.  Federal funding would cover three-quarters of the average cost of community college, and participating states would be expected to contribute the remaining funds necessary to cover the tuition for eligible students.

The President’s plan also includes a new American Technical Training Fund, which would award funding to programs that have strong employer partnerships and include work-based learning opportunities, provide accelerated training, and accommodate part-time work.

These proposed initiatives are aimed at addressing growing income inequality in America.  The response from House GOP leadership has not been positive.  A spokesman for House Speaker Boehner said: “With no details or information on cost, this seems more like a talking point than a plan.”  Given that the proposal comes from the White House and involves a significant domestic spending investment, prospects for congressional action and approval are not bright.

Municipal Bankruptcy Reform Bill Introduced

Rep. John Conyers (D-MI) reintroduced in the new 114th Congress the Protecting Employees and Retirees in Municipal Bankruptcy Act of 2015 (H.R. 96). The bill addresses serious shortcomings in existing Chapter 9 municipal bankruptcy law that were brought to light in the recent Detroit bankruptcy case by strengthening protections for employees and retirees in municipal bankruptcies. Conyers first introduced the bill in the last Congress but no action was taken at that time.

Chapter 9 is intended to create a process to address financial emergencies. As currently written, the law is vague and has created confusion and serious inequities. H.R. 96 would make important corrections to address problems in existing law that AFSCME has advocated for. The bill would make it clear that a debtor must engage in good faith negotiations in a genuine effort to reach agreement and avoid bankruptcy. It would prohibit debtors from voiding or rejecting collective bargaining agreements and provisions through unilateral action.  And, it would reform the federal bankruptcy code to prevent Chapter 9 from being used to sidestep, invalidate, preempt or otherwise take precedence over state constitutions and state and municipal laws protecting pensions, retiree health care and other retiree benefits.

Job Growth Strong in 2014

According to just-released U.S. Department of Labor data, 2014 was the country’s best year of job growth since 1999.  More than 2.9 million jobs were created last year, and the unemployment rate fell to 5.6% in December.  This is a substantial drop from the 6.7% rate in December 2013.  Economists surveyed by CNNMoney predict that the unemployment rate will drop to 5.2% by the end of 2015.  However, wages continue to stagnate.

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