The Washington Report.
March 26, 2007
Budget battles have taken center stage in Washington recently as the Senate passed its budget resolution and the House finished up work last week on a supplemental appropriations bill that will provide additional funding for the wars in Iraq and Afghanistan as well as several other priorities. In addition, several new proposals have recently been introduced that aim to address the issue of uninsured children and a renewed push to pass legislation to enhance the nation’s competitiveness is starting to move forward.
Budget & Appropriations
On February 14, the Senate passed by a vote of 81-15 a continuing resolution funding much of the federal government for the remainder of the fiscal year. The House had passed the same legislation on January 31 and the President signed the bill into law before the previous continuing resolution expired on February 15. The series of continuing resolutions were required after only the Defense and Homeland Security Appropriations bills were passed before the beginning of the fiscal year last October.
As was reported in the previous Washington Report, while most programs under the bill are funded at or near FY 2006 funding levels, the Council was pleased that additional funding was added for several programs on behalf of which the Council weighed in with its support. The National Institutes of Health, the National Science Foundation, Community Health Centers and Amtrak were among programs that received additional funding in the legislation that was signed into law.
On March 14, Senate Budget Committee Chairman Kent Conrad (D-ND) unveiled his FY 2008 budget resolution. On March 16, the Senate Budget Committee approved the plan on a party-line 12-11 vote. On March 23, the Senate passed the budget resolution on a 52-47 vote. The $2.96 trillion plan would raise some new revenue through efforts to close the tax gap of owed but unpaid taxes and it proposes to increase spending in several areas. Sen. Conrad does not pursue significant savings in mandatory benefit programs such as Medicare and Medicaid, as the President did in unveiling his budget last month. His plan calls for $948.8 billion in discretionary spending, about $16 billion more than called for under the President’s plan. By 2012, Chairman Conrad calculates that his plan would yield a $132 billion surplus. Any extension of the tax cuts of the past few years that are set to expire in 2010 would need to be fully offset under pay/go requirements. Under Sen. Conrad’s original plan, no extensions of the tax cuts were assumed. Several Democrats who had voted for the 2001 tax cuts, however, offered an amendment that was passed 97-1 in favor of extending several tax cuts targeted at the middle class, including a child tax credit, marriage penalty relief, and a cut in the estate tax.
Contained in the budget blueprint is a reserve fund of up to $50 billion to reauthorize the State Children’s Health Insurance Program (SCHIP) over the next five years to ensure that all currently uninsured children would be covered. In addition, under the Senate plan, education priorities would receive $6.1 billion more than under the President’s budget. The plan also calls for almost $1.8 billion in FY 2008 funding for Amtrak, about double the amount proposed by the President, $480 million more than the FY 2007 funding level, and even more than the amount requested by Amtrak itself. At a funding level of $1.78 billion, Amtrak would finally have some extra money to pay off debt and attend to long-overdue maintenance and infrastructure work on the Northeast Corridor.
In the early morning hours of March 22, the House Budget Committee passed its version of the FY 2008 budget resolution by a party-line vote of 22-17. The $2.96 trillion package contains language calling for the continuation of some recent tax cuts including the $1,000 child tax credit; marriage penalty relief; the institution of the 10 percent tax bracket for low income earners; and deductibility of state and local sales taxes. It contains $22 billion in additional discretionary funds beyond the level proposed in the President’s budget. The plan is projected to lead to a $153 billion surplus by the year 2012 and pay/go rules would require any spending increase or tax cut to be fully offset.
On March 23, the House passed by a vote of 218-212 a $124.3 billion emergency supplemental appropriations bill. While the bill has significant funding for the wars in Iraq and Afghanistan, as well as funding for an array of other programs, it also requires the withdrawal of U.S. troops from Iraq by the end of August 2008. The bill also includes military readiness language and enforces rules that limit tours of deployed troops to no more than 13 months and requires at least a year between tours of duty. Other spending in the bill includes $400 million in additional funding for the Low Income Home Energy Assistance Program (LIHEAP) and $750 million for the SCHIP program to go towards states that are experiencing a funding shortfall in the SCHIP program in FY 2007.
Earlier, on March 22, the Senate version of the emergency supplemental appropriations legislation was approved by the Senate Appropriations Committee. The Senate version has a pricetag of $121.6 billion and sets a goal, but does not require, withdrawal from Iraq by March 31, 2008. The full Senate is scheduled to debate the measure this week.
Health
On March 14, Senator Hillary Rodham Clinton (D-NY) and House Energy and Commerce Committee Chairman John Dingell (D-MI) introduced legislation to expand healthcare coverage access to all children. The Children’s Health First Act allows states to expand the State Children’s Health Insurance Program (SCHIP) to provide coverage to families with incomes of up to 400 percent of Federal Poverty Level (FPL). The legislation also includes tools and resources to help states identify and enroll the millions of children currently eligible for health coverage programs that are not currently enrolled. In addition, the bill allows families to purchase affordable insurance through the SCHIP program and provides new incentives to strengthen and protect coverage already provided by employers that more than 50 percent of the nation’s children currently rely on. Furthermore, the Children’s Health First Act contains provisions aimed at preventing future funding shortfalls in the SCHIP program.
Earlier, on February 16, House Democratic Caucus Chairman Rahm Emanuel (D-IL) unveiled legislation that would automatically enroll all eligible children in the SCHIP program. The bill would authorize $50 billion over five years and would create a tax credit for families earning between 200 and 350 of FPL to purchase health insurance. Rep. Carol Shea-Porter (D-NH) is among the original cosponsors of Rep. Emanuel’s bill.
On March 21, Senators Tom Coburn (R-OK) and Richard Burr (R-NC) introduced legislation aimed at encouraging people to enroll in private individual health insurance plans. The centerpiece of the legislation redirects tax breaks currently given to employers to provide health insurance and gives them to individuals instead. Individuals would receive a $2,000 “Medi-Choice” tax rebate, while families would receive $5,000 to purchase health insurance. Any leftover funds could be rolled into a tax-free health savings account. Other provisions of the legislation would place restrictions on medical malpractice lawsuits, allow employers to subsidize portable individual or group insurance, and create new private, non-profit health record bank accounts, where a patient’s medical information could be accessed with an ATM-like card.
CFIUS
On February 28, the House passed legislation (H.R. 556) to reform the process of reviewing foreign investments in the United States by a vote of 423-0. The National Security Foreign Investment Reform and Strengthened Transparency Act, which reforms the process by which the Committee on Foreign Investment in the United States (CFIUS) reviews acquisitions by foreign entities of U.S. businesses, is supported by the New England Council. The legislation would institute a new mandatory 45-day investigation of all transactions involving firms owned by foreign governments. The CFIUS panel would also be required to coordinate investigations with the intelligence community and congressional leaders, and members from districts that are home to U.S. companies being acquired would need to be notified about CFIUS reviews, but only after a particular review had been completed.
Banking Committee Chairman Christopher Dodd (D-CT) is expected to consider similar legislation in the coming weeks. CFIUS reform legislation passed by the Senate last year raised concern in the business community over provisions that could significantly lengthen the CFIUS review process and others that could potentially overly politicize the process.
Competitiveness
On March 5, Senate Majority Leader Harry Reid and Republican Leader Mitch McConnell jointly introduced comprehensive innovation legislation. The America COMPETES Act (S. 761) focuses on three primary areas of importance to improve America’s innovation economy: strengthening science, technology, engineering and mathematics (STEM) education; increasing research investment; and developing an innovative infrastructure. With the high profile backing of the two Senate leaders, the Council is hopeful that this legislation, which addresses several Council priorities, is on the fast track and will be considered and passed by the Senate soon.
On March 22, Reps. Luis Gutierrez (D-IL) and Jeff Flake (R-AZ) introduced the STRIVE Act. This comprehensive immigration reform legislation includes provisions on behalf of which the Council has actively advocated over the last several years that would reform legal immigration programs that are especially critical in bringing in an adequate number of highly-educated and skilled workers to fill jobs in our region’s innovation economy. The legislation would update the cap on H-1B visas with a market-based annual adjustment; create a new student visa category to allow U.S. STEM degree holders with a job offer to transition directly from a student visa to a green card; update the employment-based (EB) green card cap and exempt those with “extraordinary ability” in high-demand professional categories that are key to the New England economy; and create an exemption from both green card and H-1B caps for foreign professionals who have received an advanced STEM degree.
GSE Reform
On March 9, House Financial Services Committee Chairman Barney Frank (D-MA) introduced legislation (H.R. 1427) to overhaul the regulatory oversight of the government sponsored enterprises (GSEs) of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The legislation would create a stronger, independent regulator of the GSEs. The new regulator would have the authority to restrict the size of their portfolios based on safety and soundness considerations. In addition, the legislation would raise the limit on the size of GSE loans from the current $417,000 to the lower of either the median home cost in an area or 150 percent of the current limit.
While the new bill is very similar to a bill passed by the House in the last Congress, there is one significant change. The previous legislation included a requirement that the GSEs allocate five percent of their profits to an affordable housing fund. The new bill instead requires the creation of such a fund based on 1.2 basis points of the GSEs’ outstanding mortgages. In the housing fund’s first year, all proceeds would go to the areas of Louisiana and Mississippi that were affected by the hurricanes in 2005. After the first year, a formula would be developed by HUD to distribute the funds nationwide.
Labor
On March 1, the House passed the Employee Free Choice Act (H.R. 800) by a vote of 241-185. This legislation would allow workers to form a union by individually signing cards (through a so-called “card-check” procedure) in support of the union rather than having to participate in a secret-ballot election. The bill would also require binding arbitration on a new union’s first contract with a company if the two sides can not reach agreement on their own. The President formally threatened to veto the legislation over concerns that it would threaten secret-ballot requirements for unionization and cause workers “to lose control over whether they belong to a union in the first place.” Supporters of the bill counter that current law is tilted too far in employers’ favor and makes it too difficult for employees to form a union.
Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Edward Kennedy (D-MA) is expected to introduce companion legislation in the Senate soon.
On March 15, Senator Kennedy (D-MA) and Representative Rosa DeLauro (D-CT) introduced legislation in their respective chambers called the Healthy Families Act (S. 910, H.R. 1542), which would require employers with 15 or more employees to provide seven paid sick days to care for their families’ medical needs. The legislation would potentially affect up to 66 million Americans. Currently, about half of all American workers have no paid sick days.
Energy & Environment
At the beginning of the 110th Congress, House Speaker Nancy Pelosi proposed the creation of a global warming and energy independence panel to review potential legislation in these areas. After Speaker Pelosi reached an agreement on jurisdiction with House Energy and Commerce Chairman John Dingell (D-MI) in February, the House Rules Committee authorized and funded the panel. Congressman Edward Markey (D-MA) will chair the new committee. Other New England delegation Members on the panel include Rep. John Larson (D-CT) and Rep. Christopher Shays (R-CT).
On March 14, several chairmen of committees with jurisdiction over global climate change legislation promised to meet House Speaker Pelosi’s summer deadline to write legislation on the issue. The House Energy and Commerce Committee, however, did not commit to a timeline. Speaker Pelosi said, “We are going to take bold action throughout this Congress to reduce our dependence on foreign oil, stop global warming, and ensure that America is in the forefront in developing innovative technologies.”
On March 11, fifty Senators asked that budget leaders increase funding for the Low-Income Home Energy Assistance Program (LIHEAP) to $5.1 billion for each of the next two fiscal years, which would represent a $2.9 billion increase over the FY 2007 appropriation. Senators Susan Collins (R-ME) and Jack Reed (D-RI) initiated the letter. On March 14, Senate Budget Committee Chairman Kent Conrad (D-ND) released the Chairman’s mark of the Senate budget resolution, which calls for $2.45 billion in funding for LIHEAP in FY 2008. The Senate number is $670 million more than the President’s budget request of $1.8 billion for the program.
On March 13, the House passed 395-1 the Energy Technology Transfer Act (H.R. 85), which would direct the Department of Energy to create a network of Advanced Energy Technology Transfer Centers throughout the United States to transfer energy efficient technologies to energy end-users. The department would award grants for a five-year period to non-profit institutions, state and local governments, cooperative extension services, or institutions of higher education to establish these centers. A companion bill has not yet been introduced in the Senate.
Homeland Security
On March 13, S. 4, the Improving America’s Security Act of 2007, passed the Senate 60-38. The bill would implement unfulfilled recommendations of the 9/11 Commission. The House passed a similar bill in January as part of the new majority’s first 100 hours agenda. Two issues may make it a challenge to reach a conference agreement: 1) minimum state funding levels for the homeland security grant program differ in the two bills – the Senate version calls for each state to receive at least 0.45 percent of funding, the House sets a minimum of 0.25 percent, with more being allocated strictly on a risk-based formula; and 2) the degree to which cargo must be scanned before it is shipped to the United States is also in dispute. In addition, the administration opposes a provision in the legislation that would grant Transportation Security Administration screeners collective bargaining rights. If that provision survives conference committee negotiations the President has threatened to veto the bill.
Small Business Tax Relief
On February 16, the House passed by a vote of 360-45 legislation to be paired with a recently-passed minimum wage increase that would target tax cuts to small businesses in order to offset some of the effect a minimum wage increase would have on these businesses. The nearly $2 billion package of tax cuts is significantly smaller than the $8.3 billion package passed earlier by the Senate. The House bill would extend the Work Opportunity Tax Credit and Section 179 expensing provisions for one year. Some national business groups such as the U.S. Chamber of Commerce support the smaller House package and oppose the larger Senate package because of concerns over revenue raisers found in the Senate bill to offset the cost of the tax cuts. Of particular concern are those that would limit deferral of executive compensation and block firms from the ability to deduct settlement payments made to the federal government. One offset included in the House package would seek to eliminate the practice employed by some investors to avoid capital gains taxes by shifting assets to their children. An agreement to move forward to resolve differences between the House and Senate packages has not yet been reached.
Hearings of Interest on the Hill
Please note that times, dates, and locations may change without notice. Call Committee to confirm before attending.
Committee: Finance
Topic: U.S.-China Economic Relationship
Time: 10:00 a.m.
Date: March 27, 2007
Location: 215 Dirksen Senate Office Building
Committee: Health, Education, Labor and Pensions
Topic: Labor Unions
Time: 10:00 a.m.
Date: March 27, 2007
Location: 430 Dirksen Senate Office Building
Committee: Aging
Topic: Affordable Drug Coverage
Time: 10:30 a.m.
Date: March 28, 2007
Location: 562 Dirksen Senate Office Building
Committee: Finance
Topic: Clean Energy
Time: 10:00 a.m.
Date: March 29, 2007
Location: 215 Dirksen Senate Office Building
House
Committee: Ways and Means Subcommittee on Health
Topic: Mental Health/Substance Abuse Parity
Time: 10:00 a.m.
Date: March 27, 2007
Location: 1100 Longworth House Office Building
Committee: Financial Services Subcommittee on Housing and Community Opportunity
Topic: Natural Disaster Insurance
Time: 2:00 p.m.
Date: March 27, 2007
Location: 2128 Rayburn House Office Building
Committee: Transportation & Infrastructure Subcommittee on Highways and Transit
Topic: Federal Fuel Tax/Highway Trust Fund
Time: 2:00 p.m.
Date: March 27, 2007
Location: 2167 Rayburn House Office Building
Committee: Appropriations Subcommittee on Energy and Water Development
Topic: Nuclear Energy
Time: 10:00 a.m.
Date: March 28, 2007
Location: 2362-B Rayburn House Office Building
Committee: Small Business Subcommittee on Regulation, Health Care and Trade
Topic: Small Medical Practices’ Health IT
Time: 10:00 a.m.
Date: March 28, 2007
Location: 2360 Rayburn House Office Building
Committee: Appropriations Subcommittee on Transportation, Housing and Urban Development
Topic: AMTRAK/Rail Administration
Time: 10:00 a.m.
Date: March 28, 2007
Location: 2358 Rayburn House Office Building
Committee: Energy & Commerce Subcommittee on Energy and Air Quality
Topic: Climate Change Cap and Trade Programs
Time: 10:00 a.m.
Date: March 29, 2007
Location: 2322 Rayburn House Office Building
Committee: Natural Resources Subcommittee on Fisheries, Wildlife and Oceans
Topic: U.S. Ocean Policy Priorities
Time: 10:00 a.m.
Date: March 29, 2007
Location: 1324 Longworth House Office Building
Committee: Small Business
Topic: Patent Reform
Time: 10:00 a.m.
Date: March 29, 2007
Location: 2360 Rayburn House Office Building
Committee: Science and Technology Subcommittee on Research and Science Education
Topic: National Science Foundation
Time: 2:00 p.m.
Date: March 29, 2007
Location: 2318 Rayburn House Office Building
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