October 16, 2007

Appropriations Update: Conference Issues
President Threatens to Veto Housing and Tax Bills
House to Vote Thursday on SCHIP Veto Override

BUDGET PROCESS STEP-BY-STEP™

This Week:

Note: Federal Government agencies are currently operating under a continuing resolution (H.J. Res. 52) allowing Federal programs, projects, and activities to continue operating at FY 2007 spending levels through November 16.

Today and balance of the week: The Senate is considering H.R. 3093, the Commerce-Justice- Science appropriations bill. The Senate-reported CJS bill is $3.4 billion over the President's request; the White House has threatened to veto both the Senate and House versions of the bill. After passing the Commerce bill, the Senate is expected to begin consideration of Labor-HHS-Education appropriations.

The House will consider legislation to extend the Federal moratorium on the ability of state and local governments to tax Internet access.

Thursday 10/18: House vote to override SCHIP veto.

Last Week:

The National Affordable Housing Trust Fund Act of 2007 (H.R. 2895); passed by a vote of 264-148. On Tuesday 10/9, the administration threatened to veto the act.

The Tax Collection Responsibility Act of 2007 (H.R. 3056); passed by a vote of 232-173. Prior to the vote, the administration threatened to veto the act.

TREASURY RELEASES OFFICIAL DEFICIT NUMBERS

Last Thursday, October 11, Treasury Secretary Henry Paulson and OMB Director Jim Nussle released a joint statement summarizing the budget statistics for FY 2007, which ended on September 30. The budget deficit was $163 billion including social security surpluses, and $344 billion excluding Social Security surpluses.
[Context : Federal law requires that Social Security surpluses be excluded so that ongoing structural deficits are not “masked” by Social Security's temporary surpluses.]

In a statement, President Bush attributed the reduction in the deficit, as compared with last February's estimate, to the growing economy and lower taxes. Although welcoming the revised deficit numbers, Democrats challenged the President's fiscal policies and their long term effect on the budget. Statement by Senate Budget Chairman Kent Conrad (D-ND)

APPROPRIATIONS UPDATE: CONGRESS PREPARING FOR CONFERENCES

[Context: 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 non-defense discretionary spending than the President's FY 2008 Budget request. The President has threatened to veto 9 of 12 appropriations bills.]

Having resolved the differences between the respective House and Senate 302(b) subcommittee allocations, appropriations staff are pre-conferencing bills that have passed both the House and Senate.

[Context: Following adoption of a Budget Resolution, which outlines the total discretionary spending for a fiscal year, House and Senate Appropriations Committees each subdivide their allocations among twelve subcommittees. Although the total of these suballocations, called “302(b) allocations,” are the same in both chambers, individual 302(b) allocations often differ between the House and Senate.]

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

[Conference Issues: House bill includes provision allowing individuals and pharmacies to import prescription drugs from Canada and other countries.]

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 to veto the House and Senate bills. Senate will vote on the bill this week. House Summary Senate Summary

[Conference Issues: Senate bill provides additional $350 million for Commerce and nearly $400 million more for Justice. Senate also passed floor amendment to include additional $1 billion for NASA to redress costs from the Columbia crash, including reimbursements for critical science, aeronautics and exploration programs that were cut to pay for repairs.]

Defense/HR 3222: House bill $3.29 billion under President's request; Senate-reported base bill (excluding emergency border security) $3.58 billion under President's request. No veto threat. Like MilCon-VA, Congressional Democrats are likely to hold off on sending the Defense bill to the President, instead using it as vehicle to negotiate other bills' passage. House Summary Senate Summary

[Conference Issues: House bill includes language restricting torture and permanent bases in Iraq, provides $2.8 billion more for transport ship and Stryker vehicles, and would appropriate additional $270 million for satellites and GPS programs. Senate bill includes nearly $3.8 billion in emergency spending for border security, and provides additional $500 million for military health care programs.]

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

[Conference Issues: Senate bill provides additional $760 million for National Nuclear Security Administration. House bill provides $200 million more for renewable energy programs.]

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. House Summary Senate Summary

[Conference Issues: House bill provides over $200 million more for FEMA. Senate added $3 billion of emergency funding for border security.]

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

[Conference Issues: House bill appropriates $300 million more for the EPA, mostly in the form of state assistance grants.]

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

[Conference Issues: The House bill includes additional $500 million for low-income home energy assistance (LIHEAP) and $500 million more for grants to low income schools. The Senate would provide additional $250 million for NIH.]

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. House Summary Senate Summary

[Conference Issues: The House bill would provide $196 million more than the Senate for medical programs; the Senate bill would provide $177 million more than the House for base construction and closings. The Senate bill also includes $100 million in emergency funds for security at 2008 political conventions.]

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. [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

[Conference Issues: House bill provides $600 million more than the Senate for the Millennium Challenge Corporation, which provides competitive grants to nations engaged in democratic reforms.]

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. House Summary Senate Summary

[Conference Issues: The House would provide $228 million more than the Senate for Community Development Block Grants. The Senate bill includes an additional $1 billion for bridge repair and maintenance.]

HOUSE PASSES HOUSING AND TAX BILLS, REJECTS AMENDMENT TO REPEAL ESTATE TAX

The National Affordable Housing Trust Fund Act: H.R. 2895.

On Wednesday, October 10, the House passed H.R. 2895 by a vote of 264-148. The bill would allocate funds to states and local communities for the construction and maintenance of 1.5 million affordable-housing units over 10 years. Funding for the measure would initially provide $800 million to $1 billion annually. (Pelosi Release)

H.R. 1852 will partially finance the Housing Trust Fund through revenues transferred from the Federal Housing Administration's mortgage surplus. The Trust Fund would also receive financing from H.R. 1427, a separate measure that would reform regulations on Fannie Mae and Freddie Mac and allocates some of the companies' portfolio revenues to the Fund. (CBO Estimate)

In a Statement of Administration Policy, the President threatened to veto the bill, criticizing the bill for creating a “duplicative program” and opposing its funding sources.

The Tax Collection Responsibility Act of 2007: H.R. 3056.

The House also passed last week H.R. 3056 by a vote of 232-173. The bill would terminate an existing IRS program that uses private companies to collect taxes.

According to the JCT, terminating the program would cost $1 billion. These costs would be offset largely by taxing US citizens who expatriate, expected to provide $730 million over 10 years. (JCT Revenue Estimate)

The bill now faces tough opposition both in the Senate and from the White House. Senate Finance Committee Ranking Member Charles Grassley (R-IA) released a statement declaring, “The bill is dead on arrival in the Senate as far as I'm concerned.” The administration threatened to veto, saying that the program is important in helping recover lost taxes. However, House Majority Leader Steny Hoyer (D-MD) made a statement, arguing that private collection companies retain up to 25 percent of the taxes they collect, resulting in lost tax revenues for the government and incentivizing “aggressive tactics.”

Prior to the vote, the House rejected an amendment introduced by Rep. Kenny Hulsof (R-MO) to include language from H.R. 2380, a bill that would repeal the estate tax.

SCHIP OVERRIDE VOTE FACES TOUGH ODDS

On October 3, President Bush vetoed the bipartisan SCHIP (State Children's Health Insurance Program) reauthorization/expansion bill (H.R. 976). House Democrats have postponed the veto override vote until this Thursday, October 18, hoping to use the time to marshal additional Republican support for the bill. Despite bipartisan efforts to convince House Republicans to vote for the override, the Republican leadership is confident that they have the votes to sustain the veto, as reflected in a statement released by Republican Whip Roy Blunt (R-MO).

On Sunday, House Speaker Nancy Pelosi (D-CA) appeared on This Week, where she discussed bipartisan efforts to override the veto and hopes the president will make an overture if the override fails. In a press release, the administration responded to the speaker's statement, calling for “poor children first” and claiming the president is “more than willing to work with members of both parties from both Houses.”

While the bill passed the Senate with a veto proof margin of 67-29 , the House vote of 265-159, fell 13 votes short of the two-thirds required to override a veto. After the veto, the Administration released a statement criticizing the bill for expanding the SCHIP program.

[Context: The two-thirds required to override a veto is two-thirds of Representatives and Senators who are present and voting —not two-thirds of the entire chamber. For example, when the House voted to pass the bill, two-thirds of those present and voting would have been 283 votes—as opposed to two-thirds of the entire chamber which is 290 votes. For more information on veto override procedure, see this report by the Congressional Research Service .]

Supporters of the bill, both Democratic and Republican, argue that: (1) the bill does nothing to change current law, which already permits States to increase the income cap on eligible families with Administration approval ; and (2) the President's proposed reauthorization would reduce the number of low-income children currently covered by SCHIP.

[Context: 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 to pay for the cost of the reauthorization/expansion. (CBO Cost Estimate)

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

NEW BUDGET DOCS

GAO: Defense Health Care: DOD Needs to Address the Expected Benefits, Costs, and Risks for Its Newly Approved Medical Command Structure

GAO: Financial Regulation: Industry Trends Continue to Challenge the Federal Regulatory Structure

GAO: Ryan White Care Act: Impact of Legislative Funding Proposal on Urban Areas

GAO: Tax Administration: The Internal Revenue Service Can Improve Its Management of Paper Case Files