Week Ending September 21, 2012
Congress to Wrap Up Stopgap Fiscal Year 2013 Funding
We expect the Senate to pass by this weekend the House-passed, six-month spending bill, completing the remaining task necessary before Congress adjourns for the elections. The bill caps FY 2013 funding at the level set in the Budget Control Act (BCA) of $1.047 trillion, $8 billion over current law. Very few programs received more than an across-the-board increase of .6%, and all current policies were kept in place.
The deep automatic, across-the-board funding cuts (sequestration) which will be triggered in January was not addressed in this bill. Congress will likely address sequestration when it returns to Washington, D.C. for its “lame duck” session following the November elections.
Leading Senate Democrats Say No Cuts to Social Security Benefits
Twenty-nine Senate Democrats, a majority of the Senate Democratic caucus, have signed a letter stating that they will not support including cuts to Social Security benefits for future or current beneficiaries in any deficit reduction plan. The letter was released at a press conference this week held by Senators Bernie Sanders (D-VT), Mark Begich (D-AL), Sheldon Whitehouse (D-RI) and Al Franken (D-MN.). Significantly, two prominent and influential Democratic leaders, Majority Leader Harry Reid (D-NV) and Senate Democratic Conference Vice Chair Charles Schumer (D-NY), also signed the letter.
Assistant Majority Leader Dick Durbin (D-IL), the third member of the Democratic leadership, did not sign the letter. He served on a deficit reduction commission established by President Obama in 2010 and voted in support of a proposed plan which was not officially approved by the commission. The so-called “Bowles-Simpson” plan includes significant cuts to Social Security benefits. Senator Durbin supports two of them: a change in the cost of living formula that would reduce annual benefit adjustments and an increase over time in the retirement age to 69 which would force individuals to wait longer to claim benefits or to avoid receiving a lower benefit amount.
The Bowles-Simpson plan is being pushed aggressively by its co-chairs, Erskine Bowles and Alan Simpson, and is supported as a framework for deficit reduction talks by a number of congressional Democrats in part because it includes increased revenues – although not nearly as much as AFSCME believes is necessary. In addition, although Republican presidential candidate Mitt Romney and his running mate Rep. Paul Ryan (R-WI) have not discussed Social Security specifically during the campaign, they have supported privatization in the past, and Ryan’s budget plan this year clearly anticipates cuts to Social Security benefits.
House Democratic Leaders Urge House Speaker Boehner to Delay Congressional Recess to Address America’s Economic Problems
House Democratic leaders wrote House Speaker John Boehner (R-OH), urging him to cancel congressional recess until Congress fulfills its responsibilities to struggling Americans. The letter stated: “Democrats are committed to staying in session as long as it takes to ensure certainty for the middle class, growth for the economy, and the creation of jobs for the American people. The American people want us to work together and we’re ready to get the job done.”
Republican leaders scheduled only eight days of voting between August 3 and November 6. The letter notes that recessing this week “would make us the earliest Congress to leave town to campaign in more than 50 years. It would be a dereliction of our duty to lead.” Specifically, the letter urged a comprehensive and balanced plan to prevent sequestration and to responsibly reduce the deficit through a mix of cuts and revenues. The letter went on to urge Congress to enact middle-income tax cuts to provide certainty for millions of American taxpayers and for the economy and passing President Obama’s jobs bill, which can create more than one million jobs.
New State Flexibility in Temporary Assistance for Needy Families Work Requirements Survives Partisan House Opposition
As expected, the House GOP leadership held an election-oriented, mostly partisan vote on a Resolution of Disapproval against the U.S. Department of Health and Human Services’ memorandum allowing states increased flexibility to design welfare-to-work strategies. The resolution (H.J. Res. 118) passed by a vote of 250-164. The Senate will not be holding a vote on Senator Orrin Hatch’s (R-UT) companion Resolution of Disapproval.
Rejected House Bill Would Have Eliminated Current Visa Program
The House rejected Rep. Lamar Smith’s (R-TX) STEM Jobs Act (H.R. 6429) that would have reallocated up to 55,000 green cards a year from the “diversity visa” lottery program to the graduates of U.S. universities with science, technology, engineering and mathematics (STEM) advanced degrees. The 257-158 vote occurred under suspension of the rules, which requires a two-thirds majority for passage. While bipartisan support exists for increasing the number of green cards available to foreign-born graduates of U.S. universities with advanced degrees in STEM fields, the Congressional Black Caucus, Congressional Hispanic Caucus and Congressional Asian Pacific American Caucus (Tri-Caucus) and others objected that this legislation would have curtailed a legal visa program to do so. The Diversity Visa Program provides a path to legal immigration for residents of nations with historically low rates of immigration to the U.S., including African nations whose residents received about 50% of these visas in recent years. No further action is expected this year on any STEM visa legislation.
New Congressional Analysis Reports Tax Cuts for Wealthy do not Grow Economy and Causes Greater Income Inequality
A new analysis by the nonpartisan Congressional Research Service (CRS) found that lowering federal income tax rates does not correlate with economic growth and reducing top tax rates does not result in productivity growth. The analysis found instead that the top tax rate reductions increase the concentration of income for the wealthiest Americans, causing greater income disparities.
The CRS report also found that tax rates for the highest earners are currently at their lowest levels since the end of the Second World War. This lends further support to AFSCME’s position that the Bush tax cuts should be allowed to expire for the top 2% of earners as scheduled on December 31. AFSCME opposes any extension – even short-term – of these tax breaks for the wealthiest.
America’s federal tax system should help build and maintain a just society. AFSCME supports federal tax policy that raises adequate revenues, promotes equal opportunity, protects the vulnerable, helps create jobs, and encourages investments in vital public services and infrastructure. Progressive tax policy can achieve these goals and avoid potential budget cuts in the looming sequester, which could devastate critical services, eliminate millions of jobs, and prolong America’s economic difficulties.
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