Update from Washington, D.C. 11/04/2011
This past week, supercommittee members unveiled “go big”
proposals for deficit reduction that reflect the continuing
partisan divide preventing the panel from reaching an agreement.
The committee’s Thanksgiving deadline to produce a deficit
reduction package of at least $1.2 trillion is fast approaching,
so it is no surprise that talks are heating up. The competing
proposals were presented during closed meetings of the joint
committee, so few specifics are currently available. Although the
two parties have wide ideological differences, these proposals
present a first step toward narrowing their differences.
Democrats on the panel proposed a package that is expected to
save $3 trillion over the next decade through an even mix of
spending cuts and revenue increases. To achieve the requisite
savings, the proposal includes additional discretionary
appropriations cuts, as well as $500 billion in cuts to Medicare
and Medicaid. It also includes $1.3 trillion in new tax revenue.
This will continue to be a sticking point for Republicans,
although House Majority Leader John Boehner (R-OH) has not
completely ruled out some new revenue.
Republicans on the deficit panel responded with a comprehensive
proposal of their own that is estimated to save $2.2 trillion. It
relies heavily on spending cuts but would also set in motion a
tax code overhaul. It remains unclear whether Republicans on the
panel will look only at corporate tax reform or if they will also
consider individual tax rates and exemptions.
On the appropriations front, the Senate passed a fiscal year 2012
“minibus” appropriations package (HR 2112) that combines the
Agriculture, Commerce-Justice-Science (CJS), and
Transportation-HUD spending bills. The package provides a total
of $128 billion in discretionary spending for the fiscal year
2012. It will now go to a conference committee, where House and
Senate appropriators will reconcile their differences. It is
expected that conferees will work with overall target numbers
that more closely resemble the Senate’s figures. Conferees are
targeting November 14 to complete their work.
The CJS section of the Senate minibus would provide $53.2 billion
in discretionary funding, whereas the House bill only provides
$50.2 billion. State and local law enforcement programs would see
big cuts under the Senate bill, though much less severe than in
the House’s version. With regard to funding for the State
Criminal Alien Assistance Program (SCAAP) and the Community
Oriented Policing Services (COPS) hiring program, the House
provides no money for either, while the Senate bill allocates
$273 million and $200 million, respectively.
The Transportation-HUD section of the Senate bill would
appropriate $109.5 billion for transportation and housing
programs, including $55.4 billion in discretionary spending. The
House bill, on the other hand, would provide $103.7 billion,
including $55.2 billion in discretionary
appropriations.
One point of contention will likely to be the funding for the
Essential Air Services program, which provides subsidies to rural
airports. An earlier impasse on funding for this program shut
down most operations at the Federal Aviation Administration
(FAA). Other issues, such as federal highway aid, could also
prove controversial. The Senate bill provides $41.1 billion for
fiscal year 2012, while the House bill would cap obligations at
$27 billion.
For HUD, both bills would maintain major housing programs, though
at different levels. The House measure would fund the Community
Development Block Grant (CDBG) formula program at $3.5 billion, a
$200 million increase from fiscal year 2011. The Senate measure,
however, would reduce CDBG funding to $2.85 billion.
Although the House and Senate are seemingly making progress on
fiscal year 2012 appropriations, they are running short on time.
The federal government is operating on a stopgap continuing
resolution that expires November 18. Therefore, another
short-term extension will be needed in the coming weeks. A
continuing resolution to keep the government running into
mid-December will likely be added to the “minibus” in
conference.
In related news, there are plans to move a second “minibus”
package through the Senate. It is expected to combine the Energy
and Water (HR 2354), Financial Services (S 1573), and State and
Foreign Operations (S 1601) measures. This package may not gain
the same bipartisan support as the first, as it is expected that
multiple contentious amendments will be proposed.
In addition to the fiscal year 2012 appropriations process, the
Senate considered two competing infrastructure proposals.
President Obama’s plan (S 1769) called for $50 billion in
spending for roads, transit, railroad, and airport construction.
An additional $10 billion would be used to create a national
infrastructure bank that would fund long-term transportation
projects. The measure would be financed by a 0.7 percent surtax
on those earning more than $1 million.
The Republican alternative (S 1786) would fund highway and
transit infrastructure projects for two years at current levels,
while repealing some federal environmental regulations. Both
measures were rejected.
Across Capitol Hill, Speaker Boehner recently announced that
House Republicans were working on a new approach to
transportation reauthorization that would pair expanded energy
production with highway spending. While the details have yet to
be finalized, Boehner indicated that legislation would be
formally introduced in the coming weeks and considered in the
House by year’s end. The proposal is likely to face an uphill
climb in the Senate, where a majority of Democrats are opposed to
expanded oil and gas production.
This past week, the House considered and passed legislation that
would prohibit state and local governments from imposing any new
“discriminatory” taxes on wireless service providers and property
(i.e., cell phones) for five years. The measure does include
several exceptions to the rule that helped garner the support of
over 200 bipartisan cosponsors. State and local taxes enacted
prior to the bill’s enactment would be grandfathered in. Local
governments would still be able to raise taxes on wireless
services, so long as taxes are also raised on all goods and
services generally. Wireless taxes could also be raised if the
matter is cleared by a local vote or referendum, which is
consistent with California’s State constitution. The legislation
also exempts taxes to improve 911 emergency systems and those
aimed at providing universal cell phone service to rural areas.
No action has been taken on a companion bill in the Senate.
In other news, CSAC joined the County Welfare Directors
Association of California in commenting on two proposed federal
rules implementing federal health reform. CSAC commented on the
operation of the health insurance exchanges and how eligibility
would be determined for individuals who may move between Medi-Cal
and subsidized private health insurance coverage. In both
instances, CSAC noted the critical responsibilities of
California’s counties in ensuring that income-eligible residents
receive health coverage. That expertise should be tapped by the
state and federal government when designing the complex
mechanisms to provide the right choices to lower-income
individuals using the exchange and when determining and
maintaining eligibility for health insurance plans.