Week Ending June 21, 2013
Senate Sets Overall Spending Levels; House Subcommittee Approves Transportation-HUD Spending Bill
This week, the Senate Appropriations Committee adopted along party lines a fiscal year 2014 overall spending level of $1.058 trillion, $91 billion above what the House has approved. The Senate also set levels for each of the 12 subcommittees, which significantly exceed the austere levels set earlier by the House. The Labor, Health, Human Services and Education bill (LHHS), for example, received a spending level that is $42.53 billion higher than the House level, with an additional $1.253 billion exception from sequestration for additional funding to address fraud and abuse in Medicare and rising administrative costs for Social Security. Transportation and HUD received an allocation of $54.045 billion, nearly $10 billion higher than the House’s level.
No clear plan exists for how the wide differences between House and Senate funding levels will be resolved. It seems likely that stop-gap spending measures will be needed to keep the government running until late October or early November when the debt ceiling will have to be increased and a broader agreement will likely be forced.
In a clear indication of how draconian House spending levels are, the House Appropriations Subcommittee on Transportation-HUD-Related Agencies approved a bill cuting overall funding by 15%, which is 24% less than President Obama’s budget request. Moreover, this is 9% less than the current post-sequestration level. For example, the bill cuts Community Development Block Grant (CDBG) funding by 45%. Democrats opposed the budget cuts and Ranking Member Ed Pastor (D-AZ) said: “Unfortunately, you received an impossible allocation, and the bill we’re considering today does not adequately address the infrastructure and housing needs that were articulated during our hearing process.”
Senate Continues its Work on Comprehensive Immigration Reform
The full Senate continued work this week on its comprehensive immigration reform legislation (S. 744). Amendments introduced by Sens. John Cornyn (R-TX), Rand Paul (R-KY), Mike Lee (R-UT), John Thune (R-SD), and David Vitter (R-LA) that would have in one way or another established border enforcement “triggers” for the path to citizenship were all either tabled or defeated. An amendment introduced by Sen. Jeff Merkley (D-OR) and passed on a voice vote would increase the employment of Americans by requiring state workforce agencies to certify that employers are actively recruiting U.S. workers and that a shortage of qualified U.S. workers exists before employers could fill seasonal positions with guest workers. Sen. Joe Manchin’s (D-WV) amendment that provides for common sense limitations on salaries for border security contractor executives and employees passed on a 72 to 26 vote.
Also this week, the nonpartisan Congressional Budget Office (CBO) released its budgetary and economic analyses of S. 744. The CBO found that not only does S. 744 pay for itself, it will decrease the federal budget deficit by $175 billion dollars in the first 10 years and by an additional $700 billion over the following 10 years. A large increase in tax revenues from newly-legalized immigrants is the primary driver of this dramatic deficit reduction. For every dollar spent for implementing the bill, there will be nearly two dollars being paid in taxes. And, state tax revenues will get a boost as both the number of workers in the U.S. increases and more people pay taxes. The CBO’s estimated increase in payroll taxes translates into an increase of about $748 billion in state tax revenues by 2033. Other economic benefits of immigration reform the CBO identified include the creation of millions of new jobs due to a significant increase in the Gross Domestic Product (GDP), and an additional $214 billion being paid into Social Security in the first 10 years and by 2033 immigration reform will generate an additional $900 billion in Social Security taxes.
Senate Majority Leader Harry Reid (D-NV) has said he will schedule a floor vote on S. 744 no later than next Friday, June 28, the last day the Senate is in session before its July 4 recess.
House Committee Passes Budget Process Bills
This week the House Budget Committee passed two partisan bills recycled from previous sessions to change the budget process. But, they do 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 has not even met to resolve differences between the House-and Senate-passed budgets. No amount of budget process changes can overcome that.
The bills are the Pro-Growth Budgeting Act (H.R. 1874) and the Baseline Reform Act (H.R. 1871). H.R. 1874 would require the use of gimmicks to hide the harmful impact of tax cuts on the budget and would make it very difficult to ensure that corporations and the wealthy pay their fair share in taxes. H.R. 1871 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 federally-funded 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 to characterize any inflation-adjusted levels as spending increases.
Neither of these bills, 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.
House Committee Passes Two Piecemeal Immigration Bills
This week, the House Judiciary Committee passed two immigration bills that fail to fix our broken immigration system. H.R. 2278, sponsored by Rep. Trey Gowdy (R-SC), passed on a party-line vote of 20-15. The bill shifts enforcement of our country’s immigration laws to states and localities without providing any path to citizenship for aspiring Americans. AFSCME opposed this bill, informing Committee members that requiring state and local law enforcement officers to be immigration agents will drive a wedge between them and the immigrant communities they are sworn to protect. This will result in the victims of crimes and witnesses to crimes failing to come forward, making everyone less safe. The panel also passed on a largely party-line vote an amendment introduced by Rep. Steve King (R-IA), which would block the Obama administration’s policy to focus deportation efforts on undocumented immigrants who pose a danger. A similar proposal from Rep. King was added to the Department of Homeland Security spending bill (H.R. 2217) that passed earlier this month. The Committee also adopted a proposal by Chair Bob Goodlatte (R-VA) to criminalize a person’s unlawful presence in the U.S., with a penalty of up to six months in prison for a first offense.
The following day, the Judiciary Committee passed H.R. 1773 on a party-line vote of 20-16. This bill establishes a new agricultural guest worker program which will decrease farm workers’ wages and eliminate requirements that employers provide work guarantees, transportation and housing. It also fails to include a pathway to citizenship for agricultural workers. AFSCME opposed this bill as well.
The House Judiciary Committee plans to take up two additional piecemeal immigration bills next week, one on the employment-based system to verify work authorization-called E-Verify, and another on a visa program for higher-skilled workers. It remains unclear when and if the House “gang of seven” will introduce its more comprehensive immigration reform bill.
Student Loan Negotiations Continue
One legislative week remains until student loan rates on subsidized Stafford loans double unless Congress extends the current rates or passes comprehensive student loan legislation. Bipartisan negotiations have been taking place in the Senate, spurred by Sens. Joe Manchin, Angus King (I-ME), Richard Burr (R-NC), and Lamar Alexander (R-TN). But efforts at compromise have not produced any plans that would be better for students than if rates were simply allowed to double. It would be unwise to pass legislation that locks in steep rates with no limits on all federally-backed student loans – including subsidized and unsubsidized Stafford loans, graduate Stafford loans, and PLUS loans – simply to get past the deadline. AFSCME is encouraging Congress to pass an extension of current rates while it continues to work on a long-term solution that does not increase the costs of higher education for students and their parents.
House Rejects Farm Bill with Large Funding Cuts for SNAP Benefits
In a surprise move, the House has handed the House GOP leadership an unexpected defeat by voting 195 to 234 against approval of the Farm Bill. The vote came after an amendment by Rep. Jim McGovern (D-MA) to strike the $20.5 billion cut to the SNAP program was rejected by 188 to 234 and an amendment by Rep. Steve Southerland (R-FL) to cut the SNAP program even more passed 227 to 198. The net effect was to unravel a longstanding political coalition between urban and rural and Democratic and Republican interests that has sustained the Farm Bill for decades. AFSCME strongly supported the McGovern amendment and had urged members of the House to reject additional cuts to the SNAP program and to vote against the bill if the SNAP cuts were not dropped.
Senate Committee Holds Hearing on Workforce Investment Act (WIA) Extension
The Senate Health, Education, Labor and Pensions Committee held a hearing this week on the operation of the Workforce Investment Act. The witnesses included a representative from Temple University which participates in a labor-management partnership in the Philadelphia area with other health care employers and AFSCME affiliate 1199's training program. In addition, Sens. Patty Murray (D-WA) and Johnny Isackson (R-GA) circulated a preliminary draft of legislation to reform WIA. The draft will provide a basis for future discussions which are intended to lead to the committee considering and approving legislation in July. The House approved a WIA bill, which AFSCME strongly opposed, earlier this year.
Supreme Court Rules on Drug Company Pay-for-Delay Deals that Hurt Consumers
The Supreme Court ruled in FTC -vs- Actavis, Inc. that pay-for-delay agreements between brand and generic drug companies are subject to antitrust scrutiny by the U.S. Federal Trade Commission. Brand name drug makers try to sidestep competition by offering patent settlements that pay generic companies not to bring lower-cost alternatives to market. These “pay-for-delay” patent settlements effectively block all other generic drug competition for a growing number of branded drugs. Generic drugs help make medicines affordable for millions of American consumers, and hold down costs in Medicare and Medicaid. Prices for generic drugs are typically 85% less than for brand-name drugs. According to an FTC study, pay-for-delay deals cost consumers and taxpayers $3.5 billion in higher drug costs every year. The Congressional Budget Office has estimated that legislation restricting these agreements would reduce the debt by almost $5 billion over the next decade.
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