Update from Washington, D.C. 05/06/2011
Congress returned to Washington following its two-week spring
recess to face a crowded agenda, with raising the debt limit
taking center stage. However, news of the death of Osama bin
Laden briefly overshadowed legislative business on Capitol Hill
as numerous lawmakers on both sides of the aisle lavished praise
on President Obama for ordering the risky operation.
While lawmakers showed a moment of unity over the events in
Pakistan, they quickly turned to the thorny partisan issues
confronting them, such as the national debt limit, the fiscal
2012 budget resolution, and legislation to defund the 2010 health
care law.
U.S. Department of Treasury Secretary Timothy Geithner recently
revealed to Congress that it has until August 2 to raise the
federal debt ceiling before the country defaults on its financial
obligations. Currently, the debt limit sits at $14.3 trillion.
Defaulting could ignite another global financial crisis and
diminish the nation’s creditworthiness in the eyes of
international economists. Wasting little time, Secretary Geithner
delivered the somber message to members upon their return to
Washington, setting the stage for the controversial debt limit
debate.
Previously, Geithner announced that the debt limit would be
breached on May 16. Given that Congress will not likely settle
the debt dispute by that date, it will be necessary for the
Treasury chief to implement a number of debt reduction policies
in order to give lawmakers additional time to work out a
long-term plan. Among the myriad of proposals on the table, the
Treasury Department would halt distribution of State and Local
Government Series (SLGS) securities that provides aid to states
and localities for infrastructure projects.
Republicans and Democrats alike agree that additional spending
limitations are needed in order to rein in the national debt. For
its part, the GOP would like to advance a measure that would
create a constitutional amendment requiring a balanced budget.
Though all 47 Senate Republicans are on board with the proposal,
the GOP would need a two-thirds majority to clear the bill – an
unlikely scenario given the expected opposition from most
Democrats.
Additionally, Republicans are circulating a plan on Capitol Hill
that would limit federal spending equal to a certain percentage
of the gross domestic product (GDP). Specifically, the proposal
would gradually decrease spending annually until it equals 18 to
20 percent of the GDP.
Democrats, on the other hand, do not appear to have a specific
debt reduction plan that the party is embracing. Nevertheless, a
number of ideas are being floated in the halls of Congress, such
as imposing a deficit cap that would trigger spending cuts or
raising taxes if the spending limit is breached. In order to
boost revenues, Democrats are also pushing for tax increases on
the wealthiest Americans.
Policymakers will have several opportunities to weigh in on the
debt limit discussion. House Majority Whip Kevin McCarthy (R-CA)
has kicked off a series of listening sessions that will allow
members to voice their ideas and opinions on how to tackle the
issue. The listening sessions will feature a number of
congressional leaders including House Ways and Means Committee
Chairman Dave Camp (R-MI) and Budget Committee Chairman Paul Ryan
(R-WI).
As for the administration, Vice President Joe Biden hosted the
first of many bipartisan working group sessions on May 5. The
working group consists of members from both chambers and both
sides of the aisle appointed by party leadership.
On a related matter, Senate Budget Committee Chairman Kent Conrad
(D-ND) is expected to release a fiscal 2012 budget proposal next
week. According to the chairman, the draft budget blueprint would
save $4 trillion over the next 10 years. Although specific
details of the proposal have yet to be released, Chairman Conrad
has indicated that it will be a mosaic of proposals derived from
recommendations of the president’s debt commission and from the
Senate’s bipartisan “Gang of Six.”
The Conrad budget package is expected to include revisions to the
tax code that would expand the tax base and decrease tax rates,
as well as implement cost-saving changes to Medicare. While
timing for floor debate on the spending measure is uncertain, the
bill will likely be marked up by the budget panel sometime during
the week of May 9.
Although it is unclear if Congress will ultimately approve a
fiscal year 2012 budget resolution, which is not signed by the
president, the House and Senate Appropriations committees are
expected to provide the various subcommittees with their spending
allocations for fiscal 2012 at some point in the near future. The
budget resolution serves as a spending guide for House and Senate
appropriators.
In other developments, the House cleared a bill (HR 1213) on May
3 that would block mandatory funding for grants to assist states
with establishing health insurance exchanges. The measure,
sponsored by Energy and Commerce Committee Chairman Fred Upton
(R-MI), passed easily by a vote of 238-183.
Despite the vote in the House, HR 1213 has virtually no chance of
becoming law. For his part, Senate Health, Education, Labor and
Pensions Committee Chairman Tom Harkin (D-IA) has made it clear
that the bill would be “dead on arrival” in the Senate. In
addition, the White House has signaled that President Obama would
veto any measure that would defund the health care law.
States have until 2014 to set up their health insurance
exchanges. In the event that a state does not have an exchange
established, the federal government would be required to
intervene. The aforementioned bill is among a long list of
defunding measures passed by House Republicans in an effort to
halt the implementation of health care reform. Another measure,
HR 1214, recently passed by House Republicans would block funding
for school-based health care construction. That bill cleared the
lower chamber by a vote of 235-191.
On a related health matter, California County Supervisors Liz
Kniss (Santa Clara County) and Scott Haggerty (Alameda County)
flew to Washington, D.C. this week to urge Congress to reject
cuts to Medicaid and other programs of critical importance to
counties. Joined by more than a dozen other members of NACo’s
Large Urban County Caucus, Kniss and Haggerty participated in a
Senate press briefing to fight proposals to block grant the
program. Lead by Senator Jay Rockefeller (D-WV), six other
senators stood with the supervisors to call attention to
Medicaid’s important role in sustaining a health safety
net.
Rockefeller stated that turning the program into a block grant
would force counties to raise local property taxes, states to
reduce benefits, and Medicaid coverage to be eliminated in some
cases altogether. As a result, many of the 68 million low-income
children, parents, pregnant women, people with disabilities, and
senior citizens enrolled in Medicaid would lose their health
coverage or face the expensive burden of paying for less
comprehensive, more expensive private coverage
out-of-pocket.
Other members speaking at the event included Senators Jeff
Bingaman (D-NM), Ron Wyden (D-OR), Jeff Merkley (D-OR); Al
Franken (D-MN); Richard Blumenthal (D-CT) and, Bernard Sanders
(I-VT).
It should be noted that the House-passed budget calls for nearly
$1 trillion in cuts to Medicaid over the next ten years. If
transformed into a block grant program, the non-partisan
Congressional Budget Office estimates that federal Medicaid
payments to states and counties would be 35 percent lower in 2022
than currently projected, and 49 percent lower in 2030.
Finally, in other news, lawmakers received an earful of
complaints from constituents over their spring recess about
skyrocketing gas prices around the country. According to House
Republicans, the recent outcries helped spur advancement of a
bill (HR 1230) that would permit offshore drilling lease sales in
the Gulf of Mexico and Virginia. The measure, sponsored by House
Natural Resources Committee Chairman Doc Hastings (R-WA), is part
of the GOP’s American Energy Initiative plan that aims to
increase domestic energy production.