Week Ending October 2, 2015
Government Shutdown Avoided, For Now
Congress avoided a government shutdown by passing a short-term funding bill, known as a continuing resolution (CR), which keeps the federal government operating through December 11. The Senate vote was 78 to 20 with all Democrats (46) and 32 Republicans voting yes. The House vote was 277 to 151 with all Democrats (186) and 91 Republicans crossing over to vote yes. President Obama then signed the bill, which did not cut off federal funding for Planned Parenthood.
What will occur next remains unclear. House Speaker John Boehner (R-OH) announced his intention to “clear the barn” of pending legislation prior to his retirement at the end of October. He has been actively working to broker a broader, two-year budget deal. Treasury Secretary Jack Lew recently announced that an increase in the debt ceiling will be necessary by November 5, adding pressure to reach a budget deal very soon.
Speaker Boehner recently spoke with President Obama and Senate Majority Leader Mitch McConnell (R-KY) about the desire to raise the debt ceiling and to reach a two-year budget agreement that would provide some form of “sequester” relief from across-the-board spending cuts for fiscal years (FY) 2016 and 2017. House Democratic Leader Nancy Pelosi (D-CA) and Senate Democratic Leader Harry Reid (D-NV) expressed their commitment to reach a similar agreement, noting their shared priorities with President Obama to provide sequester relief equally between defense and non-defense spending, to keep the bills “clean” with no harmful policy changes, and to raise progressive new revenues. AFSCME strongly supports these priorities.
40% Tax on Worker Health Benefits: Momentum Builds For Repeal
Senate Democrats recently introduced legislation to fully repeal the 40% tax on high-cost worker health benefits (so-called “Cadillac tax”). While the tax is not scheduled to go into effect until 2018, repeal is needed because it is already causing some employers to reduce workers’ 2015 health benefits, increase workers’ co-pays and deductibles, and shift other health costs onto workers. The “American Worker Health Care Tax Relief Act” (S. 2075) includes “sense of the Senate” language that revenue loss from a repeal should be offset to ensure the Affordable Care Act continues to reduce the federal deficit and improve Americans’ health coverage. This bill was introduced by Sen. Sherrod Brown (D-OH) and has 12 Democratic co-sponsors.” AFSCME actively supports repeal.
House Works to Gut Affordable Health Care Act
Three House panels adopted several harmful changes and one needed reform to the Affordable Care Act (ACA) through a special legislative process called “reconciliation.” Using this process, the House would repeal key parts of what makes the ACA work, which would create substantial upheaval in health care coverage for children, working families, seniors and individuals with disabilities. The combined bills would eliminate the rule that everyone needs to get coverage. This requirement helps spread the risks of getting sick and allows everyone to get more affordable coverage without being discriminated against because of a preexisting health condition, their profession, or their gender. If the repeal becomes law, it would increase premiums in the individual health insurance market by 20%. Fourteen million Americans would lose insurance coverage. The bills also would eliminate the requirement that employers do their share by providing quality, affordable coverage.
The reconciliation package also would repeal the 40% tax on high cost, employer-sponsored health benefits. While AFSCME supports repealing this 40% tax, we oppose including this helpful reform in a package of harmful provisions that would gut the ACA.
The bills also repeal a modest excise tax on medical devices that was adopted to help fund the expansion of health coverage under the ACA. The tax does not apply to eyeglasses, hearing aids, wheelchairs or other devices that the public generally buys directly for individual use. Instead, it applies to devices used in medical procedures in a physician’s office or hospital. Since the enactment of the ACA, medical device industry profits have remained strong. This is due, in part, to the increased sales the industry is experiencing under the ACA. It is more than fair to ask the industry to pay a small excise tax to help pay for the expansion of health coverage under this law. The bills also eliminate a panel that has not been established to improve Medicare.
President Obama is expected to veto this reconciliation package if it reaches his desk.
Puerto Rico Fiscal Crises Solutions Explored in Senate Hearing
The Senate Finance Committee held a Sept. 29 hearing entitled “Financial and Economic Challenges in Puerto Rico.” Senators discussed legislative options including allowing Puerto Rico to extend Chapter 9 bankruptcy protections in the Commonwealth; increasing Medicaid and Medicare federal funding to Puerto Rico; and reforming federal tax policies governing Puerto Rico. Sen. Charles Grassley (R-IA), who leads the Judiciary Committee which has jurisdiction over the bankruptcy issues, said Congress should consider exempting Puerto Rico from the federal minimum wage and the Jones Act, which provides protections for U.S. jobs related to shipping products to the Commonwealth.
Delegate Pedro Pierluisi (D-PR) said he opposes bankruptcy but supports Chapter 9 authority as a tool in negotiations to restructure Puerto Rico’s debt. There was broad agreement that economic growth would help the island’s economy. Sen. Bob Menendez (D-NJ) urged action, cautioning that Puerto Rico might transition “from crisis to full blown tsunami.” As the hearing ended, Finance Committee Chairman Sen. Orrin Hatch (R-UT) said: “I’m not sure we have enough information to make these earth-shaking decisions up here… I’m open and I think others on this Committee are open.” AFSCME opposes implementing austerity policies and is working to increase investments in Puerto Rico.
House Passes Six-Month Extension of FAA Funding Without Privatizing Air Traffic Control
On Monday, the House passed a six-month extension of funding for Federal Aviation Administration (FAA) programs without harmful privatization of air traffic control (ATC) operations. The stop-gap measure was then sent to the Senate. AFSCME fought efforts by industry officials and politicians to remove ATC operations from the FAA and place them in a new non-governmental agency. But, the threat of privatization remains.
Rep. Bill Shuster (R-PA), chairman of the House Transportation and Infrastructure Committee, wanted to pass a “transformational” FAA bill that would have included major reforms as well as funding. He and industry officials are concerned that the FAA is not modernizing and implementing the satellite-based NextGen navigation system as quickly as intended. However, two shutdowns of the agency since 2012 and across-the-board “sequestration” cuts have destabilized FAA’s funding and its ability to implement a vast new navigation system. AFSCME continues to work with other Labor allies in opposition to privatization at FAA.
House Committee Votes to Block Department of Labor Rule Protecting Investors
The House Committee on Financial Services voted 34 to 25, largely along party-lines, to block the Department of Labor from issuing new safeguards that would protect investors by requiring investment advisors to act in their clients’ best interest. Incredibly, under current law investment advisors can recommend specific investment strategies to their clients that enrich the advisors. All Republicans voted to block DOL, joined by just one Democrat, Rep. David Scott (D-GA). The so-called Retail Investor Protection Act (H.R. 1090) would prohibit the DOL from advancing its proposed “fiduciary rule” to reduce conflicts of interest in investment advisors’ advice until the Securities and Exchange Commission acts on this issue.
AFSCME strongly supports DOL’s fiduciary rule and efforts to require investment advisors to provide advice in the best interest of their clients.
Bills Introduced to Protect Disability Insurance Benefits
On Monday, Sen. Ron Wyden (D-OR) and Rep. Sandy Levin (D-MI) introduced the Social Security Earned Benefits Act (S. 2090; H.R. 3621). The legislation would allow a reallocation of funds from the Social Security Old-Age and Survivors Insurance trust fund to the Disability Insurance (DI) trust fund. This mirrors President Obama’s reallocation request in his FY 2016 budget. The bill currently has 28 co-sponsors in the Senate and 10 in the House.
For years, the Social Security Administration’s Office of the Actuary has projected that the DI trust fund reserves would be depleted by the end of 2016, at which point revenue coming into the trust fund would cover only 80% of benefits for current and future beneficiaries. Over the past several years, AFSCME and others have strongly urged Congress to reallocate Social Security funds to ensure full DI benefits. AFSCME applauds the introduction of these bills that would ensure the financial security of all parts of our Social Security system through 2034 while rejecting cuts to Social Security benefits, coverage, or eligibility.
Senate Passes Bill to Improve Medicaid Emergency Psychiatric Demonstration
The Senate passed legislation (S. 599) to extend the Medicaid Emergency Psychiatric Demonstration through September 30, 2016. Under the demonstration a number of states can receive federal Medicaid payments for limited inpatient emergency psychiatric care for individuals ages 21 to 64. Current Medicaid law prevents such payments as a general matter. The original demonstration had an irregularity; it excluded publicly-operated psychiatric facilities. S. 599 corrects this glitch and opens the extended Medicaid demonstration to public psychiatric facilities. AFSCME supports swift passage in the House of Representatives.
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