Week Ending November 18, 2011
House Rejects Balanced Budget Amendment
This week, the House rejected H.J. Res. 2, an extreme and unwise amendment to the U.S. Constitution that would require Congress to pass a balanced budget each year. It would restrict any government spending in excess of tax receipts, including Social Security, in a given year. Further, it would require a congressional super-majority of three-fifths to raise the debt ceiling, a vote that nearly paralyzed Congress this summer and caused the stock market to tumble with only a simple majority requirement.
This amendment would devastate the economy. When applied to this year alone, it would require $1.5 trillion in cuts, resulting in the loss of 15 million jobs, double unemployment, slash Medicare, Medicaid, Social Security and other vital services, and deeply harm state and local governments struggling with serious fiscal problems.
While it did not garner the necessary two-thirds, or 290 votes, it could come up in the House again, and the Budget Control Act requires a Senate vote on a balanced budget amendment prior to year’s end.
Super Committee Impasse Continues
With less than a week before the self-imposed November 23 deadline, it is looking less and less likely that any agreement will be reached by the Joint Committee on Deficit Reduction (super committee) charged with coming up with an additional $1.2 trillion in budget savings over the next 10 years. Super committee members from both sides of aisle continue meeting late into the night, but so far have failed to reach any breakthrough. The major sticking point still appears to be Republican reluctance to embrace real revenue increases.
An earlier GOP proposal appeared to open the door to possible revenue increases, but it was rejected by Democrats as not a serious offer since it actually called for reducing tax rates for the wealthy and making the Bush tax cuts permanent. The last proposal on the table was one offered by the Democrats, which would have cut spending by $876 billion, including $225 billion from Medicare and $50 billion from Medicaid, and raised tax revenue by $400 billion. Democrats also recommended using $700 billion in unspent funds from the wars in Iraq and Afghanistan to pay for a $300 billion jobs program called for by President Obama, as well as making changes to fix the alternative minimum tax and to extend financing for doctors who treat Medicare patients. Republicans rejected that offer primarily because it would have allowed the Bush tax cuts to expire.
At this point both sides appear to be bracing for any possible fallout from not being able to reach agreement and are already taking about what happens next. If no agreement is reached by the committee and nothing is agreed to by both the House and Senate, automatic, across-the-board budget cuts are supposed to be triggered starting in 2013. But, 2013 is still a long way off and there is open talk about reaching an agreement for further deficit reduction or to suspend, avoid or minimize the automatic cuts. Stay tuned.
House and Senate Pass First Three Spending Bills
This week, Congress passed a bundle of three spending bills to finalize funding for the departments of agriculture, commerce, justice, transportation and housing. The bill also extends funding for the remaining federal agencies through December 16 and includes $3.2 billion for disaster aid. President Obama quickly signed the spending package into law. The plan to bundle another small set of bills has run aground, and it appears that the remaining nine funding bills will be rolled into one large bill, likely before year’s end.
House Leadership Unveils Transportation Bill
Speaker of the House John Boehner (R-OH) joined House Transportation and Infrastructure Committee Chairman John Mica (R-FL) in unveiling their long-awaited multi-year surface transportation bill. Unfortunately the proposal did not contain many details, including how they plan to pay for the bill. Past proposals introduced by Chairman Mica would have resulted in the loss of 600,000 jobs. Democratic Leader Nancy Pelosi (D-CA) released a statement following the introduction of the proposal expressing disappointment that it was vague on details, and she encouraged both parties to work together to create jobs and improve the economy. Earlier this month, the Senate rejected the Rebuild America Jobs Act (S. 1769), the infrastructure component of President Obama’s jobs plan, by a vote of 51 to 49, short of the 60 votes needed to proceed with consideration of the bill. The legislation, which was taken from the President’s overall jobs initiative, would create and sustain jobs by investing $60 billion to rebuild America’s ailing infrastructure. It would make immediate investments in highways, transit, rail and aviation, establish a national infrastructure bank to leverage private and public funds for a broad range of infrastructure projects, and is completely paid for by asking millionaires to pay a small surtax.
House Panel Backs Effort to Repeal Long-Term Care Services Insurance Plan
A House panel advanced legislation (H.R. 1173) which would repeal the Community Living Assistance Services and Supports (CLASS) program, which was created as part of the Affordable Care Act to address the growing need for long-term care. The Department of Health and Human Services recently suspended the program, but Republican members of the panel said that it is insufficient and the program must be repealed. Democratic members of the panel advocated for using the existing framework to build a financially sustainable program. Rep. Frank Pallone Jr. (D-NJ) said: “Repealing it at this point accomplishes nothing other than to send a very negative message to the disabled community and those who are supportive of trying to come up with a long-term care solution.” Long-term care is expensive and can quickly deplete families’ resources. Medicare only covers short-term and limited long-term care services, and Medicaid is only available to those who have depleted virtually all their resources as a result of being frail or suffering from dementia. AFSCME strongly opposes repeal of the CLASS Act.
U.S. Supreme Court Will Hear Challenges to Affordable Care Act
Over the last several months, three federal circuit courts have ruled on constitutional challenges to the Affordable Care Act (ACA), with two ruling that it is constitutional and one ruling that it is not. This week, the U.S. Supreme Court announced it would take up the challenges to the law. It is expected that arguments will be heard in March or April and that a decision will be issued in June.
Because of the division in the circuit courts, the Supreme Court was expected take up the question of whether it is constitutional to require individuals to obtain insurance coverage or face a tax penalty. However, the Court made the surprising announcement that it would also hear arguments over whether the ACA’s expansion of the Medicaid program is constitutional. Under the ACA, states are required to expand Medicaid coverage to all individuals who have incomes up to 133% of the federal poverty level. Currently, state Medicaid programs are required only to cover children and their parents, adults with disabilities and poor individuals over age 65. States are not required to cover childless adults, even if they are penniless. Under the ACA, the federal government will pay 100% of the cost of the expansion initially, but this will be reduced gradually to 90% in 2020 and thereafter. States will be required to pick up the remaining 10% of the cost.
An adverse ruling over the Medicaid expansion would severely undermine the expansion of coverage under the ACA. But it would also have major implications for other federal programs that impose standards on states as a condition of receiving federal funding. For example, federal education funds impose non-discrimination requirements on schools in order to protect people of color, women and those with disabilities. An adverse Court could potentially limit or end such strings on federal dollars.
GAO Recommends Automatic, Targeted and Timely Federal Medicaid Assistance to States During Economic Downturns
Had an automatic trigger been in place during the recession that began in 2007, extra federal assistance to states to fund their Medicaid programs would have begun sooner and lasted longer than was available in the American Recovery and Reinvestment Act (ARRA) according to a report recently released by the nonpartisan Government Accountability Office (GAO). The GAO developed a prototype formula that would automatically release temporary increases to states’ federal Medicaid match (FMAP) if at least 26 states showed a sustained decrease in their employment-to-population ratio. This formula would have triggered assistance to begin in January 2008 and end in September 2011, compared with the ARRA which provided an increased FMAP from October 2008 through June 2011. The advantages of this approach include avoiding the lag between economic downturns and congressional action, facilitating state budget planning, providing states with greater fiscal stability, and better aligning federal assistance with the magnitude of an economic downturn’s effects on individual states.
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