Week Ending June 17, 2011
Balanced Budget Amendment Passes House Judiciary Committee; Senate Hearing Expected Soon
This week, the House Judiciary Committee passed a Balanced Budget Constitutional Amendment (H.J. Res. 1) along party lines by a vote of 20-12. The measure caps spending at 18% of the gross domestic product (GDP), requires a 2/3 vote in Congress to raise revenues, and a 3/5 vote to raise the debt ceiling. Government spending has not been as low as 18% of GDP since prior to the creation of Medicare and Medicaid.
Demanding spending cuts in periods of slow economic growth is the exact opposite of what is needed to stabilize the economy and avert recessions. Rather than eviscerating critical programs, Congress should be providing additional spending to stimulate jobs and economic growth. Instead, this amendment is a recipe for making economic recessions more frequent and deeper. It would harm seniors, veterans, children, persons with disabilities, and other vulnerable populations by requiring massive cuts to vital programs such as Social Security, Medicare and Medicaid.
The earliest the amendment could come to the House floor is early July, although conservatives are hoping to have additional time to secure the needed 290 votes and may push for a delay until closer to the debt ceiling vote in late July or August. Former Sen. Judd Gregg (R-NH) strongly urged Congress not to play politics with tying a balanced budget amendment (BBA) to debt reduction efforts.
Sen. Dick Durbin (D-IL) announced this week that a Senate Judiciary subcommittee will hold hearings “to examine the constitutional and fiscal implications of S.J. Res. 10 [BBA] and assess whether this proposal meets the high bar for enshrinement in the Constitution,” which he noted has only been amended 17 times in the history of our nation.
Budget Talks Continue; Health Care Tax Exclusion Could Be at Risk
This week, the Biden deficit reduction talks continued at an accelerated pace. A range of options exist for a budget deal, including an agreement to raise the debt ceiling for nine months in exchange for $1 trillion in budget savings; an 18-month extension of the debt limit, along with $2 trillion in savings; and a longer-term agreement to cut the deficit by $4 trillion — a deal favored by Obama’s deficit commission and some congressional Republicans. House Speaker John Boehner (R-OH) has said the length of a debt ceiling extension would hinge on the amount agreed to in spending cuts. A shorter debt-limit extension would mean that lawmakers would have to vote repeatedly to raise the country’s debt ceiling before facing reelection in 2012, which is not viewed as a popular option.
There is concern that a final deal could involve a rollback of the tax exclusion for employer-sponsored health care benefits. AFSCME has launched a major lobbying effort to protect our health insurance coverage.
The Biden talks will continue for the next two weeks. There is a strong push to reach a deal prior to the July 4 congressional recess, but many details remain to be finalized between now and then.
Congressional Briefing Highlights Problems with Taxing Employer-Sponsored Health Insurance Benefits
Rep. Joe Courtney (D-CT) joined the AFL-CIO, AFSCME, and a broad coalition of labor unions to host a briefing for congressional staff to discuss the importance of the federal tax exclusion for maintaining employer-sponsored health insurance benefits. The briefing highlighted that two-thirds of Americans with health insurance – 156 million people – have employment-based insurance, and recent proposals to tax these benefits would be regressive, dramatically increase taxes on working families, and undermine their health care coverage. AFSCME is concerned that proposals to reduce the federal deficit and shift health costs and risks to individuals would undermine recent progress toward achieving affordable and comprehensive health care coverage. For example, the 2010 Simpson-Bowles Deficit Commission proposed putting a dollar cap on the federal tax exclusion at the 75th percentile of plan costs in 2014 (in 2011 dollars roughly $5,800 for single coverage, and $15,900 for family coverage). The Economic Policy Institute estimates that if this tax exclusion cap is enacted, in 2018 it would tax 52% of private sector workers with single coverage health insurance and 61% with family coverage. For more details in EPI’s report, see http://www.epi.org/page/-/BriefingPaper309.pdf?nocdn=1
Rep. Schakowsky Introduces Nurse Staffing Bill
On June 15, Rep. Jan Schakowsky (D-IL) introduced the Nurse Staffing Standards for Patient Safety and Quality Care Act of 2011 (H.R. 2187), which would improve the delivery of safe and quality health care by requiring hospitals to meet minimum nurse-to-patient staffing levels. Safe nurse staffing standards also help address the nursing shortage by correcting harmful working conditions that drive nurses away from the bedside. Research shows that unsafe nurse staffing levels jeopardize quality patient care and puts patients at greater risk of medical errors, hospital-acquired infections and death. The bill also protects the rights of nurses to speak out for their patients and for themselves without fear of discrimination or retaliation. Sen. Barbara Boxer (D-CA) introduced a similar bill (S. 992) recently.
Sen. Rockefeller and Rep. Waxman Introduce Medicare Drug Savings Act of 2011
On June 15, Sen. John D. Rockefeller (D-WV) and Rep. Henry Waxman (D-CA) introduced the Medicare Drug Savings Act of 2011 (S. 1206 / H.R. 2109), which would eliminate a special deal in the 2003 Medicare prescription drug law that allows drug companies to charge Medicare higher prices for lower income beneficiaries. Prior to the law, brand-name drug manufacturers paid a rebate for beneficiaries who were eligible for both Medicaid and Medicare. Now, drug companies no longer have to provide the rebates and receive windfall profits as a result. By eliminating these windfall profits, this legislation would reduce the deficit, saving taxpayers an estimated $112 billion over the next 10 years.
Amid Medicaid’s Fiscal Challenges, Governors Disagree About Solutions
In a letter to congressional leaders this week, Republican governors from 28 states and Puerto Rico urged the Congress to give states sweeping authority over the Medicaid program and to establish “flexible” financing mechanisms, such as a block grant or a cap on federal spending. The only Republican governor who did not sign the letter was Governor Rick Snyder of Michigan. Unlike the GOP governors, Democratic governors have strongly opposed a block grant or cap approach to Medicaid because it would shift more Medicaid costs onto states. Federal Medicaid director Cindy Mann told a health care conference on Monday that converting Medicaid to a block grant could curtail state flexibility in times of crisis or change, because it would prevent the federal government from providing additional payments as it did during the recent recession.
Beginning on July 1, states will no longer be receiving the additional federal Medicaid funding match – totaling over $90 billion – contained in the Recovery Act. The enhanced federal match was scheduled to expire in December, but Congress extended it for six months. This extra federal Medicaid financing allowed states to cover millions of additional people who lost private coverage due to unemployment or other economic impacts of the deep recession. Even though the number of Medicaid beneficiaries is still higher now than when Congress approved the Recovery Act, there is no initiative from Congress or the White House to extend the increased federal match, a reflection of the deficit reduction fever that has gripped the nation’s capital.
This leaves cash-strapped states – most of which are still digging out from the prolonged recession and reduced revenues – with additional fiscal responsibility to provide these essential medical benefits to low-income seniors, children, and people with disabilities while funding other vital services. This pressure on states has caused some state officials to cut Medicaid payments to health care providers, limit covered services, increase beneficiaries’ co-payments, and expand the use of managed care.
House Passes Harmful Agriculture Spending Bill
On Thursday, the House passed its fiscal year 2012 spending bill for agriculture programs (H.R. 2112) by a narrow margin of 217-203. Nineteen Republicans joined all Democrats in voting against it. The bill includes cuts to several food programs that serve low-income people, including more than $600 million in reduced spending for the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) program. At this funding level, the program is not expected to be able to serve all those who are eligible. H.R. 2112 also cuts $2 billion from the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program) reserve fund, which was included in President Obama’s FY 2012 budget. This funding is set aside in the event that participation is greater than expected. AFSCME will work to reverse these cuts when the Senate takes up this bill.
House Bill Would Mandate All Employers to Use Flawed E-Verify System, Threatening Our Economy and All Workers
On Wednesday, the House Immigration Subcommittee held a hearing on the Legal Workforce Act (H.R. 2164), introduced this week by Rep. Lamar Smith (R-TX). H.R. 2164 requires every employer in the United States to use an electronic employment verification system (EEVS), patterned on current voluntary E-Verify, to check the employment eligibility of everyone who applies for a job. Instead of comprehensive immigration reform, this bill is an enforcement-only approach that fails to meet its stated objective: with only 4% of the nation’s employers using the current system, E-Verify has not detected 54% of undocumented immigrants who were entered into the system. The bill will also exacerbate the difficulties unemployed workers face in our struggling economy, as it allows employers to use the EEVS to prescreen new hires. Given current error rates, it is predicted that between 480,000 and 1.3 million workers would erroneously be flagged by the EEVS and have to fix their records before starting their jobs and receiving a first paycheck – if they are fortunate enough to not lose their jobs during the delay.
There are a myriad of other problems with this legislation. For the first time, it would require that all current federal, state and local government employees be reverified within six months of enactment of the bill. This constitutes an enormous new administrative mandate on cash-strapped state and local governments, and will result in public employees having to take time off from work to resolve information discrepancies. An unprecedented burden would also be placed on the already-understaffed Social Security Administration (SSA), which, as of February 2011, had 774,000 pending initial disability cases and a wait time of more than 270 days for 30% of SSA’s cases. If SSA has to spend time and resources verifying Social Security numbers and fixing database errors for work authorization purposes, it will have less time and resources to handle its primary function, which is to provide accurate and timely benefits to millions of deserving Americans. In addition, the Congressional Budget Office found that a similar 2008 bill would decrease federal revenue by more than $17.3 billion over 10 years because many employers and workers would resort to the underground economy, outside of the tax system. These revenue losses would increase federal budget deficits.
“AFSCME continues to support comprehensive immigration reform including an earned path to citizenship for undocumented immigrants in the U.S., reform of guest worker programs to protect U.S. workers, and enforcement policies that achieve their stated objectives in a humane manner while not harming the American economy and workers,” stated AFSCME President Gerald W. McEntee. “We oppose the Legal Workforce Act because it fails to achieve any of these goals, and will instead hamper our unsteady economic recovery.”
Senate Examines Quality in Early Childhood Programs
Last week, a Senate subcommittee held a hearing chaired by Sen. Barbara Mikulski (D-MD) to examine quality early education. The subcommittee heard from community providers of early childhood education, economic experts and Joan Lombardi, deputy assistant secretary of Health and Human Services. There was bipartisan support for focusing congressional attention on early education. Sen. Richard Burr (R-NC) noted the need for improved background checks for child care providers included in a bill he has introduced (S. 581). AFSCME opposes some of the specific provisions in that legislation.
The federal umbrella program for early education, the Child Care and Development Block Grant (CCDBG), has not been reauthorized in 15 years. Reauthorizing CCDBG in a congressional environment dominated by spending cuts would pose significant challenges to improve quality with limited resources.
Poll Finds Public Opposes House-Passed Budget Provisions to End Medicare’s Guaranteed Benefits
A recent poll conducted by CBS News found that 68% of Americans view Medicare favorably. It found that while Americans think changes are needed to the Medicare program, they soundly reject a proposal like the one in the budget plan passed by the House along party lines to replace Medicare’s guaranteed benefits with a voucher-like program in 2022. Only 31% think Medicare should be changed to a program that gives seniors a fixed payment towards the purchase of private health insurance, while nearly six in 10 want to keep Medicare as it exists now. AFSCME strongly opposes turning Medicare into a voucher program or cutting Medicaid, both of which are vital to low-income seniors, individuals with disabilities, state budgets and the economy.
POWER Act Would Protect Worker Rights
This week, Sen. Robert Menendez (D-NJ) and Reps. George Miller (D-CA) and Judy Chu (D-CA) introduced the POWER (Protect Our Workers from Exploitation and Retaliation) Act. This legislation would protect the right of immigrant workers to expose labor abuses and to organize without fear of retaliation by unscrupulous employers. When these employers are allowed to use immigration enforcement as a weapon to quash organizing and other labor rights, it undermines the wages, working conditions and organizing rights of all workers.
Sign Up to Receive the Weekly Report and Action Alerts via Email and Become an AFSCME e-Activist!
In an effort to move toward electronic transmission which will allow us to put important federal legislative updates in your hands sooner, we urge you to sign up to receive the Federal Legislative Report via your email address. Please go to http://www.afscme.org/join and check the "Federal Legislative Report" box under subscriptions on the bottom of the page.