October 24, 2014

Washington Budget Report: Dec. 20, 2011

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This is the last regularly scheduled Washington Budget Report for 2011.

House Blocks Senate Bill on Payroll Tax Cut

The House today registered its disapproval of a bill that won strong bipartisan support in the Senate to extend long-term unemployment benefits and a Social Security payroll tax cut.

The Senate legislation would continue the tax cut and unemployment benefits through February, giving lawmakers more time to negotiate one-year extensions. The bill also would postpone a scheduled reduction in Medicare payments to doctors.

Today the House voted 229-193 on a procedural motion that prevented an up-or-down vote on the Senate bill and calls for a House-Senate conference committee. Democrats, however, had indicated they were not interested in further negotiations over the Senate bill.

The $30 billion cost of the two-month extensions in the Senate’s legislation would be paid for primarily with increased mortgage fees and premiums.

Senate Majority Leader Harry Reid and Senate Republican Leader Mitch McConnell negotiated the bill last week. It passed on an 89-10 vote Saturday with McConnell and most other Senate Republicans supporting it.

The Senate then went into a recess on the widespread assumption that House approval of the bill would quickly follow.  Since then, however, Speaker John Boehner and other House Republicans have called on the Senate to return to Washington to focus again on negotiating a plan that would be in effect through the end of 2012.

Reid has scoffed at this suggestion, saying he had negotiated the Senate deal “at Speaker Boehner’s request” and that Democrats would not re-open negotiations on a long-term measure “until the House follows through and passes this agreement.” House and Senate Republicans are also criticizing each other over the issue.

An Encouraging Medicare Proposal

 Bipartisan efforts to reform Medicare were elevated this week by the release of a proposal from Senate Budget Committee member Ron Wyden (D-Ore.) and House Budget Committee Chairman Paul Ryan (R-Wis.). Their proposal would convert Medicare into a “premium support” system beginning with newly eligible seniors in 2022. Under this change, recipients would choose whether to remain in traditional Medicare or get support from the government to help purchase private insurance. The value of the support would rise with premiums.
 
In a new blog posting today, Robert L. Bixby, executive director of The Concord Coalition, said it was “heartening” to see a “bipartisan pair of prominent lawmakers” release a joint Medicare reform proposal. He also called premium support “a promising strategy for putting Medicare on a realistic budget while providing incentives for providers, insurers and beneficiaries to improve the value and quality of care.”
 
Bixby notes that the new proposal differs significantly from the Medicare plan that Ryan proposed last spring and that was included in this year’s House Budget Resolution. Under the new proposal, for example, traditional Medicare would remain an option for seniors.
 
The Wyden-Ryan plan is very similar to the one proposed by the Rivlin-Domenici Bipartisan Policy Center Debt Reduction Task Force (BPC). That plan has recently been updated and outlined in a premium support primer produced by the Brookings-Heritage Fiscal Seminar.

With limited details released by Wyden and Ryan, it is not clear whether the plan would actually reduce long-term budget deficits. The Affordable Care Act already sets a target for Medicare growth that is the same as specified in the Wyden-Ryan plan.

“With or without premium support,” Bixby writes, “there is no question that at some point Congress will need to tackle Medicare reform. No fiscal sustainability plan will work unless Medicare costs are brought under control.”

Read more with The Wyden-Ryan Medicare Plan Moves the Ball Forward

Congress Completes 2012 Appropriations

This week the appropriations process for Fiscal Year 2012 is expected to be completed when President Obama signs a $915 billion omnibus appropriations bill into law.  Since the fiscal year began Oct. 1, several federal agencies had been funded through a series of short-term continuing resolutions that provided Congress with additional time to reach agreement.

With the enactment of the omnibus, the threat of a government shutdown this year has been averted and all federal agencies will now be funded through the end of the fiscal year.  The House had passed the bill Friday with a 296-121 vote and the Senate approved it Saturday with a vote of 67-32.

The  bill included the nine appropriations bills which had not yet been enacted: Defense, Energy and Water, Financial Services, Homeland Security,  Interior/Environment, Labor/Health and Human Services/Education, the Legislative Branch, Military Construction/Veterans Affairs, and State/Foreign Operations.

When the omnibus bill is combined with the previously enacted bills,  discretionary funding for FY 2012 will equal $1.043 trillion -- the level both parties agreed to as a part of the law that raised the debt limit earlier this year (the Budget Control Act of 2011).

In a year when several bipartisan deficit reduction efforts have failed, the completion of the appropriations process using the framework included in the debt limit law offers at least one promising sign.  Appropriations cuts alone are not enough to address our fiscal challenges -- but the bipartisanship of the agreement is an example Congress should follow in addressing the revenue and mandatory spending policies that drive deficit spending.

Iowans Should Focus on U.S. Fiscal Challenges

With Iowa residents making up their minds on the GOP presidential hopefuls before the state’s Jan. 3 caucuses, it is important for voters to focus on what the candidates say – or don’t say – about their plans to meet the country’s fiscal challenges.

In an op-ed Monday in the Iowa City Press-Citizen, Sara Imhof, Midwest field director for The Concord Coalition, urges voters who have the chance to ask “targeted and pertinent questions” such as whether candidates can identify areas for bipartisan compromise to put the country’s budget on a more responsible path.

“Given the failure of elected officials to follow through on thoughtful recommendations from bipartisan groups — notably President Obama’s fiscal commission — candidates should explain how they intend to provide better fiscal leadership in a practical and balanced manner,” writes Imhof, who is an Iowa resident.

She urges voters to pay particular attention to what the candidates are saying about such issues as defense spending, taxes and entitlement reform.

“Ideally,” Imhof writes, “presidential candidates would be eager to clearly explain their plans for fiscal reform. But all too often, they fall back on clichés and vague rhetoric. Iowans can provide a valuable service for all by insisting that the candidates spell out how they intend to meet the difficult challenges facing the nation.”

Read more with Imhof: Questions to Ask Candidates Before the Caucuses

House Committee Approves Budget Process Legislation

Last week the House Budget Committee approved the Expedited Legislative Line-Item Veto and Rescissions Act of 2011.  Sponsored by Chairman Paul Ryan (R-Wis.) and Ranking Member Chris Van Hollen (D-Md.), the legislation creates an expedited process for Congress to act on spending cuts proposed by the President.

The President currently has the authority to propose rescissions, which cancel funding
previously provided in legislation.  However, the authority is used infrequently and Congress has  developed a habit of ignoring the requests.  

The Ryan-Van Hollen legislation improves the process by creating expedited legislative procedures for Congress to consider rescissions proposed by the President.  Within 45 days of enactment of an appropriations bill, the President could transmit a message to Congress proposing a rescission of any amount of funding included in the bill.  Congress would then be required to vote on the recommendations without amendments.   Any savings that result are intended for deficit reduction, and budget resolution allocations and statutory caps on discretionary spending would be adjusted downward to reflect the rescissions.   

The Concord Coalition has previously supported similar proposals establishing an expedited process for considering spending cuts.  However, enhanced rescission authority would do little to address the underlying structural deficit resulting from existing tax and entitlement laws.  The House legislation is a positive step, though the proposal would be more effective if its focus on discretionary spending were broadened to include special-interest tax breaks and mandatory spending increases.

Also last week, Sen. Joe Lieberman (I-Conn.) proposed a measure to extend the special legislative procedures that would have applied if the Joint Select Committee on Deficit Reduction had produced a plan. Under Lieberman’s proposal, bipartisan legislation to reduce the deficit by at least $1.5 trillion could be considered by Congress using procedures that would guarantee a vote while limiting debate and prohibiting amendments.