October 1, 2007

President Signs Continuing Resolution
Bush Requests '08 War Spending of $3.7 Billion Per Week
The Facts About SCHIP
Updates on Appropriations and Farm Bill
Senate Passes Debt Ceiling Increase (Without the Usual Fireworks) 

BUDGET PROCESS STEP-BY-STEP™

Saturday 9/29: President signed continuing resolution (CR) through November 16

Monday 10/1: Senate will vote on FY 2008 Defense Authorization (Democratic attempts to force a drawdown of U.S. troop levels in Iraq have failed to garner the 60 votes necessary to overcome threatened Republican filibusters); the authorization bill will then proceed to House-Senate conference.

Tuesday 10/2: Senate will begin consideration FY 2008 Defense Appropriations, hoping to turn to Commerce-Justice-Science later in the week

Later In the Week: Senate Agriculture Committee may begin marking up Farm Bill

PRESIDENT SIGNS CONTINUING RESOLUTION

On September 29, President Bush signed H.J. Res. 52, continuing government funding at FY 2007 levels through November 16 and avoiding a government shutdown. None of the 12 FY 2008 appropriations measures have been enacted, with the President threatening to veto 9 of the pending measures. [Context: Most government programs are funded on an annual basis, and lack the authority to continue operations after September 30, 2007, in the absence of FY 2008 spending authority.]

In addition to continuing general spending authority for all Federal Departments and Agencies through November 16, the CR also:

provides $5.2 billion in emergency spending for mine-resistant vehicles for troops in Iraq ;

continues the State Children's Health Insurance Program (SCHIP) through November due to the President's promised veto of congressional legislation aimed at expanding the program to cover additional children;

extends taxes and fees that support operations of the Federal Aviation Administration as Congress continues work on reauthorization of aviation programs; and

extends the Food Stamp program (since Congress has not yet completed action on the multiyear “Farm Bill” which authorizes Food Stamps).

PRESIDENT REQUESTS ADDITIONAL $42 BILLION FOR FY 2008 WAR SPENDING, BOOSTING COSTS TO $3.7 BILLION PER WEEK

On Wednesday, September 26, Defense Secretary Gates testified before the Senate Appropriations Committee and outlined a request for an additional $42.3 billion for FY'08 war spending , on top of the $150.6 billion already requested in the President's February submission. The revised request would boost total '08 war spending to $193 billion-- over $3.7 billion per week . The additional spending includes:

$14 billion for mine-resistant vehicles and other force protection
$8.9 billion to replace equipment and technology
$6.3 billion for equipping and training the Army
$1 billion for equipping and training the Iraqi security forces

Deputy Secretary of State John Negroponte also testified that the State Department would request additional '08 funding for embassy security, foreign aid and other regional operations. Prior to the hearing, Senate Appropriations Committee Chairman Byrd (D-WV) made a statement, criticizing the President for not providing full details of the revised request and warning the Administration that the committee would not simply rubber stamp spending proposals.

Chairman Byrd's Statement on Additional War Funding

OUTLOOK FOR APPRORIATIONS: DEMOCRATS TO TEST BUSH VETO THREAT

Congressional Democrats and the President are currently locked in a face-off over appropriations levels, with Congress' Budget Resolution calling for $22 billion more in nondefense discretionary spending than the President's FY 2008 Budget request. The President has threatened to veto 9 of 12 appropriations bills.

Byrd Statement on the Status of Appropriations

Status of pending appropriations:

Agriculture/HR 3161: House bill $982 million over President's request; Senate-reported bill $874 million over President's request; White House threatened a veto on July 31. House Summary Senate Summary

Commerce-Justice-Science/HR 3093: House bill $2.31 billion over President's request; Senate-reported bill $3.4 billion over President's request; White House threatened a veto on July 24. The Senate hopes to take up the C-J-S bill later this week and complete consideration prior to the Columbus Day recess. House Summary Senate Summary

Defense/HR 3222: House bill $3.29 billion under President's request; Senate-reported bill $3.58 billion under President's request. No veto threat. Senate leaders plan to consider the Defense spending bill this week. House Summary Senate Summary

Energy-Water/HR 2641: House bill $1.13 billion over President's request; Senate-reported bill $800 million over President's request; White House threatened a veto on June 13. House Summary Senate Summary

Financial Services/HR 2829: House bill $244 million under President's request; Senate-reported bill $122 million over President's request; White House threatened a veto on June 26 because of provisions that would “weaken current [trade] restrictions against Cuba .” House Summary Senate Summary

Homeland Security/HR 2638: House bill $2.06 billion over President's request; Senate bill $5.25 billion over President's request; White House has threatened to veto the House and Senate bills. One of four bills House and Senate staff are pre-conferencing. House Summary Senate Summary

Interior-Environment/HR 2643: House bill $1.95 billion over President's request; Senate-reported bill $1.498 billion over President's request; White House threatened a veto on June 25. House Summary Senate Summary

Labor-HHS-Education/HR 3043: House bill $10.83 billion over President's request; Senate-reported bill $8.28 billion over President's request; White House threatened a veto on July 17. House Summary Senate Summary

Legislative Branch/HR 2771: House bill $3.1 billion; Senate-reported bill $2.8 billion; President requested $4.33 billion (combined), White House has not threatened a veto. [Context: The House and Senate do not consider the spending of the other chamber until conference.] House Summary Senate Summary

MilCon-VA/HR 2642: House bill $4 billion over President's request; Senate bill $4 billion over President's request; White House has not threatened a veto but insists on offsets in other spending bills. One of four bills House and Senate staff are pre-conferencing. House Summary Senate Summary

State-Foreign Ops/HR 2764: House bill $700 million under President's request; Senate bill $720 million under President's request; White House has threatened to veto the House and Senate bills. One of four bills House and Senate staff are pre-conferencing. [Context: Despite coming in under the President's request, both bills face veto threats because of language that would overturn a policy barring U.S. funding for any international organization that performs abortions overseas.] House Summary Senate Summary

Transportation-HUD/HR 3074: House bill $2.77 billion over President's request; Senate bill $3.1 billion over President's request; White House has threatened to veto the House and Senate bills. One of four bills House and Senate staff are pre-conferencing. House Summary Senate Summary

SCHIP REAUTHORIZATION FACES VETO

Last week, Congress passed the SCHIP (State Children's Health Insurance Program) Reauthorization (H.R. 976). While the Senate secured a veto-proof margin of 67-29 , the House voted 265-159, falling 19 votes short of the two-thirds majority needed to override a presidential veto. The SCHIP bill would reauthorize the program and increase federal funding by $35 billion over 5 years ($30 billion more than the President's request). The bill largely resembles the Senate version, including a 61 cent per pack tax increase on cigarettes and a more modest spending increase than House version, which had called for a $47 billion over 5 years. (CBO Cost Estimate)

On Tuesday, September 25, the President reiterated his threat to veto the bill. The President criticized the bill for expanding the SCHIP program, arguing that funding could be used to cover children whose families' income greatly exceeds the federal poverty level, up to $83,000 a year, and approaching “federalized health care.” In a press release last week the Senate Finance Committee fired back, saying “the congressional agreement does not in any way raise the eligibility level for CHIP. ”

Senators Chuck Grassley (R-IA) and Orrin Hatch (R-U), who joined in negotiating the bipartisan bill, released a letter calling the conference report a “good compromise” enjoying wide support from Republicans. Grassley and Hatch hope to convince a sufficient number of House colleagues this week to override the President's promised veto.

[Context: SCHIP was established in 1997 and provides health coverage to children in families whose incomes are low, but somewhat higher than Medicaid's very tight income eligibility limits. The program operates similar to Medicaid with Federal reimbursements for a percentage of State expenditures to provide health coverage for eligible children.]

Annenberg Political Fund Fact Check on SCHIP Bill
Center for Children and Families Summary of SCHIP Bill

THE NEW FISCAL YEAR AND THE FARM BILL

What happens now that the fiscal year has ended without a new Farm Bill being enacted? According to the Congressional Research Service, not much—because most farm programs are tied to “crop years” rather than fiscal years:

The mandatory commodity support programs authorized in the 2002 farm bill cover the 2007 crops. So, even if harvest is after September 30, the subsidized crops harvested in calendar 2007 are covered by the law. The 1981 and 1985 farm bills were enacted in late December, and the 1990 farm bill was enacted in late November. Enactment of the anticipated 1995 farm bill in April 1996 is the most extreme case of belated action. The 1990 farm bill expired in 1995, but the subsequent replacement legislation was not signed into law until April 4, 1996, yet payments were made on the 1995 crops and farmers went ahead with planting operations for their 1996 crops. . .(E)nactment of a new farm bill as late as the spring of 2008 would inconvenience few farmers. CRS, RS22695.

[Context: The "Farm Bill," renewed every 5 to 6 years, governs the key aspects of Federal farm policy. Many provisions of the current Farm Bill, enacted in 2002, will expire this year. The 2002 bill covers a wide range of programs. Those with the greatest budget impact are (1) Food Stamps; (2) Commodity Support programs (government subsidies to producers of certain farm commodities--primarily corn, cotton, wheat, rice, and soybeans--intended to stabilize farm income); (3) Agricultural Conservation programs (payments and incentives addressing environmental concerns, soil erosion and water supplies);and (4) Export promotion programs.]

SENATE PASSES DEBT CEILING INCREASE

On September 27, the Senate voted 53-42 to pass H.J.Res. 43 : legislation to increase the nation's debt ceiling from $8.965 trillion to $9.815 trillion. In a July 30 letter, Treasury Secretary Paulson had informed Congress that the current debt ceiling would be reached in “early October.” Paulson later revised the estimate to October 1, urging the Senate to act quickly. Contrary to prior years, when debt ceiling debates often generated major debate (and, in some years, major fiscal legislation) Senate leaders agreed to limit Floor debate. [Context: Democrats, as the party in the majority, had the responsibility to move the debt ceiling legislation and Republicans, having been in control of the White House and Congress from 2001 through 2006, were hardly in a position to debate the issue of the rapidly increasing public debt.]

(The House long ago decided to spare itself from the periodic political storms over the debt ceiling by adopting the “Gephardt Rule,” under which the House is “deemed” to have passed a debt ceiling increase by virtue of voting on a Budget Resolution that recommends an increase.)

[Context : Federal debt is the accumulated debt of the Federal government. Whenever the Federal government runs an annual budget deficit , the additional borrowing to finance that deficit adds to the Federal debt. Federal law contains a statutory limit on the Federal debt, commonly called the “debt ceiling.” The debt ceiling approximates Gross Federal debt —which includes: (1) Debt Held by the Public (money borrowed by selling Treasury securities in the capital markets to various buyers including foreign investors, mutual funds, state and local governments, commercial banks, insurance companies and individuals); and (2) debt held by Federal government accounts , such as the Social Security Trust Funds and various federal retirement trust funds. (The Social Security and other trust funds, by law, invest all of their surpluses in nonmarketable Treasury securities.)

While a lot of political attention is paid to the debt ceiling, many economists view Debt Held by the Public as more significant economically than Gross Federal Debt, because Debt Held by the Public reflects the total amount the Federal government is borrowing from the private credit markets—with the implications that has for interest rates and available credit.]

NEW BUDGET DOCS

JCT: Estimates of Federal Tax Expenditures for Fiscal Years 2007-2011

Treasury: Issue Brief No. 1: Social Security Reform: The Nature of the Problem

GAO: The Nation's Long-Term Fiscal Outlook: August 2007 Update

GAO: Homeless Veterans Programs: Bed capacity, Service and Communication Gaps Challenge the Grant Per Diem Program

GAO: Nuclear Security: DOE and NRC Have Different Security Requirements for Protecting Weapons-grade Material from Terrorist Attacks