Week Ending July 20, 2012
House Committee Slashes Funding for Labor, Health, Human Services and Education
This week, the House Appropriations subcommittee that funds labor, health, human services and education programs approved a fiscal year 2013 spending bill that Democrats unanimously opposed due to abysmally inadequate funding levels and controversial policies. Rep. Jeff Flake (R-AZ) also voted no, calling for even deeper cuts. The bill shaves $6.8 billion from last year’s budget and a whopping $8.8 billion from the President’s request. On the same day, the House considered a bill to increase defense funding more than the Pentagon requested.
Many controversial policies included in the bill target workers and organized labor. One would prevent home health care aides from being paid overtime. Other anti-labor provisions aim to weaken collective bargaining rights, block efforts to make union certification more democratic, deny employees knowledge of their rights in the workplace, curb union organizers’ access to workers, enable the work of anti-union consultants, and reduce union election protections and flexibility.
The bill also would halt implementation of the Affordable Care Act. School funding through Title I is flat-funded for the second year in a row, and an additional $1 billion is cut from education overall. The $1 billion in cuts to the Social Security Administration would result in extensive furloughs and office closings, making it much harder for seniors to resolve issues and get questions answered by the agency which is known for high quality customer service. Labor programs would lose nearly half a billion dollars, including $224 million from the dislocated worker national reserve even though unemployment and job dislocations remain high.
The President has already vowed to veto the bill because the low funding levels violate last summer’s Budget Control Act agreement. The full House Appropriations Committee has scheduled a vote for next Wednesday, but the bill is unlikely to move to the House floor. AFSCME has registered our strong opposition to the bill.
Concern Builds as Automatic Spending Cuts Loom
As steep, across-the-board budget cuts to both defense and non-defense programs creep closer to the January deadline, concern is growing about the harsh impact of cuts totaling $1.2 trillion over 10 years and $160 billion in FY 2013. The so-called “sequester” was never intended to really happen; rather, it was supposed to be an over-the-top threat that would force a deeply-divided Congress to agree on a balanced plan for deficit reduction that included raising significant tax revenues. But GOP congressional leaders still refuse to raise revenues by allowing the Bush-era tax cuts for the wealthy to expire. Further, they adamantly oppose any cuts in the defense budget.
The Democratic congressional leadership remains opposed to the across-the-board cuts, recognizing it will hurt public services and raise unemployment, but it is also strongly opposing GOP-led efforts to shift or delay the sequester solely for defense spending and extend tax breaks for the wealthiest 2% of Americans.
This week, the House passed, a bill (H.R. 5872) requiring a report from the Office of Management and Budget and the Defense Department detailing the cuts needed to implement the sequester. A similar bill passed recently in the Senate, but neither bill will prevent the cuts from occurring. AFSCME will continue to press for tax fairness to ensure that revenues are raised to support needed investments in public services. Cuts alone, particularly in non-defense programs, will only weaken the economy further and spur deeper job losses.
Most GOP Senators Vote to Block Action on Ending Tax Loopholes that Encourage Shipping Jobs Overseas
The Senate voted 56 to 42, largely along party lines, to reject the Democrats’ efforts to end debate and move to consider Sen. Debbie Stabenow’s (D-MI) Bring Jobs Home Act (S. 3364). The bill would close a harmful federal tax loophole that encourages businesses to move jobs overseas and use the savings from these reduced tax breaks to help businesses relocate jobs back to America. No Democrat voted against considering the legislation, and only four Republicans, Sens. Scott Brown (R-MA), Susan Collins (R-ME), Dean Heller (R-NV) and Olympia Snowe (R-ME), voted to consider it. AFSCME supports S. 3364 because millions of Americans have already lost their jobs due to overseas outsourcing, and this bill would remove the tax advantages of continuing this practice. As Sen. Stabenow said: “It's outrageous that taxpayers are paying companies to send jobs abroad. Instead of giving tax breaks to companies that ship jobs overseas, Congress should cut taxes for U.S. companies that bring jobs back to America.”
President Obama strongly supports S. 3364 and included this “insourcing” proposal as one of five items on his “To Do” list sent to Congress in May. While it appears there is strong bipartisan support for this change in tax policy, S. 3364 is mired in the broader political debate on whether to let the Bush tax cuts expire for the top 2% of earners. Senate Democratic leadership is expected to try to advance this job-saving legislation again soon.
States Cannot Tighten Eligibility Rules for Medicaid
Under the Affordable Care Act, states are prohibited from tightening Medicaid eligibility rules until 2014. This provision, called “maintenance of effort,” was included to prevent states from dropping those now eligible just to have the federal government pick up the entire cost of covering them again in 2014. A number of governors have argued that the U.S. Supreme Court’s ruling on the Affordable Care Act allowed them to purge beneficiaries from the Medicaid program now.
This week, independent experts at the Congressional Research Service released a report stating that the Court’s ruling does not free states to change their current eligibility rules. This analysis is consistent with the position taken by the Obama administration.
HHS Offers States Flexibility in TANF Welfare-to-Work Rules
Late last week, the U.S. Department of Health and Human Services (HHS) issued a memorandum informing states it will allow them to test new approaches to helping adult Temporary Assistance for Needy Families (TANF) recipients find jobs, even if that means not complying with, or “waiving,” some of the work requirements in the law. Among the projects HHS could approve are extending the period in which vocational education or job search programs can count towards meeting work participation rates; improving TANF collaboration with the workforce and/or post-secondary education systems to test combining learning and work; counting participation in subsidized employment programs after recipients are no longer receiving TANF; and improving coordination with programs operated under the Workforce Investment Act. States would have to prove their methods are effective, or they would lose the waivers. So far California, Connecticut, Minnesota, Nevada and Utah have expressed interest in receiving waivers.
Senate Finance Committee Ranking Member Orrin Hatch (R-UT) and House Ways and Means Committee Chairman Dave Camp (R-MI) introduced legislation this week that would prohibit HHS from granting states waivers from TANF work requirements. The House bill (H.R. 6140) is co-sponsored by Reps. John Kline (R-MN) and Jim Jordan (R-OH). The Senate bill (S. 3397) is co-sponsored by 10 additional members of the Finance Committee, including Republican Leader Mitch McConnell (R-KY). It appears that the GOP House leadership will try to get a vote on their bill next week under suspension of House rules, which requires a two-thirds vote in favor. However, we expect that opposition from House Democrats will defeat it.
New Report Detailing State Budget Crises and Threats to State Fiscal Sustainability
The State Budget Crisis Task Force issued a 120-page report to highlight the totality of fiscal problems afflicting states. It found that “threats to fiscal sustainability create risks to essential state functions,” including education, health care and infrastructure. The report emphasizes six major threats to states finances: federal deficit reduction; eroding tax bases and volatile tax revenues; Medicaid spending; underfunded retirement plans; local government fiscal stress; and state budget laws and practices.
The Task Force recommends that the federal government consider how its actions impact state and local governments’ fiscal situations and that states modernize their tax systems to pay for needed services. The Task Force, co-chaired by Richard Ravitch and Paul Volcker, is a private research group funded by nine foundations. The report focuses on six states: California, Illinois, New Jersey, New York, Texas, and Virginia.
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