Week Ending October 18, 2013
Congress Reaches Agreement to Re-Open Government and Avert Default
The House (285 to 144) and Senate (81 to 18) approved a last minute bipartisan agreement hammered out between Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) to re-open the government and extend the debt ceiling. The deal ensured that the government would pay its bills and avoid any breach of the debt ceiling limit, but with mere hours to spare. President Obama supported and signed the legislation.
The bill raises the debt ceiling until Feb. 7, subject to a vote of congressional disapproval, which President Obama can veto. It re-opens the federal government until Jan. 15, continuing sequestration cuts. It sets in place a bipartisan House-Senate budget conference, which convened immediately on Thursday morning, to recommend longer-term tax and spending plans by Dec. 13. The agreement leaves the Affordable Care Act (ACA) virtually untouched. And importantly, it includes back pay not only for furloughed federal workers, but for state and local government and non-profit workers as well – a key AFSCME priority. Notably, the legislation does not include unreasonable Tea Party demands.
Affordable Care Act is Intact
The final agreement does not defund or delay any part of the ACA, the demand that originally drove GOP House leaders to shut down the government and threaten the nation’s first default on our national debt. The bill does include a requirement that the Department of Health and Human Services certify that verification procedures are in place to ensure that those receiving tax credits for health coverage through the ACA exchanges are in fact eligible for assistance. Despite the efforts of Senate Majority Leader Reid, the final deal does not include a provision sought by labor and many employers to suspend or delay the per person reinsurance tax on self-funded health plans that will be in effect for three years beginning in 2014.
No Additional Spending Cuts, and Social Security, Medicare and Medicaid Protected
The final deal also omits any additional spending cuts, including cuts to Social Security, Medicare or Medicaid. The agreement will fund government programs and services at the current level of $987 billion for the short term. We have been urging Congress to lift the spending caps and the across-the-board sequestration budget cuts, but that battle will continue as part of the budget conference negotiations. Given the sharp divisions between Democrats and Republicans on sequestration, it remains to be seen whether any agreement can be reached to either lift or adjust the current spending caps.
Back Pay for Furloughed State, Local and Federal Government and Non-Profit Workers
One very important provision added to the agreement, championed by AFSCME, was to ensure that federal funds will, in addition to providing federal employees with back pay: (1) compensate furloughed state and local workers at their “standard rate of compensation” during their furlough period; (2) reimburse states and other grantees for expenses that would have been paid by the federal government during the partial shut-down period, including the cost of compensating furloughed employees. Thousands of state and local government and non-profit workers had been furloughed as a result of the shutdown. This language is intended to prevent governors from cheating furloughed workers out of back wages.
Senators Reid and Barbara Mikulski (D-MD) were extremely helpful in securing these important protections for state and local government, federal government and non-profit workers.
$24 Billion Pricetag for Economic Fallout from Budget Debacle
AFSCME is relieved that the government is back up and running, public services can be restored, and public employees and non-profit staff are assured they will be compensated for back pay during the shutdown’s furlough. And it seems – at least for the time being – that the ability of a small partisan minority in one house of Congress to hold the nation’s debt ceiling hostage to partisan demands has been curtailed. But the economic fallout from the brinksmanship of the GOP’s Tea Party wing is wide-reaching. As AFSCME President Lee Saunders noted: “Republican congressional leaders were derelict in their duty…allow(ing) a fringe element in their party…to shut our government down and bring the country to the brink of defaulting on its financial obligations. Their actions demonstrated a callous disregard for this nation’s citizens, businesses and the economy… (which) should never happen again. The hardworking women and men of this country deserve better.”
During the shutdown, 800,000 federal workers and thousands of state and local government workers did not know if or when they would receive pay for the period of the shutdown. Government contractors’ employees will not receive back pay, and all the local businesses that support government operations and government employees suffered. Tourism to national parks and monuments racked up $76 million in lost income, business loans and mortgages were delayed, consumer confidence took the biggest plunge since 2008, and the subsequent impact is expected to depress spending during the upcoming holiday shopping season. Standard & Poor’s (S&P) estimates the shutdown removed $24 billion from the U.S. economy and reduced projected fourth-quarter gross domestic product (GDP) growth from 3% to 2.4%, further stalling our economy’s already tepid post-recession growth.
With the deal only guaranteeing government funding though January 15, S&P is warning that the economic fallout could worsen. While GOP Senate leaders have stated they will not support subsequent government shutdowns, Tea Party members of Congress have already stated those exact intentions.
AFSCME Activists and Leaders Take on the Tea Party
Here in D.C. and around the country, AFSCME activists and leaders teamed up with partners to organize and stage dozens of press events to protest the Tea Party shut down of government and the threat to default on the nation’s financial commitments. Our partners included the AFL-CIO, AFGE, USAction affiliates, the Alliance for Retired Americans, Organizing for America and others. Federal furloughed workers and activists from AFSCME Council 26 in D.C. participated in activities nearly every day of the shutdown, ranging from large scale rallies with members of Congress to smaller leafleting actions. Special shout outs also to Iowa Council 61, Michigan Council 25, Pennsylvania Council 13 and Arkansas Council 38 for helping to organize and/or turn out activists for multiple events in their states.
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