June 12, 2007

4 Appropriations Bills on House Floor
Senate Subcommittee Action Begins

BUDGET PROCESS STEP-BY-STEP™

June 11:

House Appropriations (full committee) marked up Financial Services - Committee Release
House Transportation-HUD subcommittee marked up - Olver Release
House Commerce, Justice, Science subcommittee marked up - Mollohan Release

June 12:

House Appropriations Committee marked up State, Foreign Operations - Committee Release
House Appropriations Committee marked up Legislative Branch - Committee Release
Homeland Security(H.R. 2638) on the House Floor

June 13:

Military Construction, VA (Senate subcommittee, 10am)
Homeland Security (Senate subcommittee, 2pm)

June 13-15:

Military Construction, VA on the House Floor
Energy and Water on the House Floor
Interior and Environment on the House Floor

June 14:

FY 2008 302 (b) allocations (Senate full committee, 2 pm)

Context: The 302(b) allocations, while seldom receiving much attention in the media, are a key decision-point in the congressional budget process and reflect the immense influence of the Appropriations Chairman. The allocations determine how much of the total discretionary pot of money will be available to each of the 12 subcommittees. Once the allocations are approved by the Committee, they are seldom revised, and under the Budget Act, Senators do not have the ability to offer Floor amendments to shift money from one subcommittee to another, since amendments that would cause any subcommittee to exceed its 302(b) allocation are subject to a point of order that can only be waived with 60 votes. (See our Points of Order and Budget Process in-a-Nutshell pages)

Military Construction, VA (Senate full committee, 2pm)
Homeland Security (Senate full committee, 2pm)
Labor, HHS, Education (House full committee)

June 15:

Bureau of Labor Statistics to release May 2007 Consumer Price Index data.

July 2-6:

Fourth of July Recess

August 6:

Beginning of 4-week August Recess

Sept. 10:

Deadline for House Education & Labor and Senate HELP Committees to report Budget Reconciliation legislation (intended to reduce student loan costs, offset by reduced subsidies to lenders).

October 1:

FY 2008 Begins

4 APPROPRIATIONS BILLS HEADED TO HOUSE FLOOR

The House is expected to take up four appropriations bills this week: Homeland Security on Tuesday; and Mil Con-VA, Energy-Water, and Interior-Environment during the remainder of the week.

Homeland Security (HR 2638):

Web Links: Committee Summary, H.R. 2638, Statement of Administration Policy

$36.3 billion -- $2.1 billion more than President's request -- almost 8% increase over FY 2007.

Largest spending increases are for DHS first responder and port security grant programs, $1.97 billion over the President's request. Programs receiving funding boosts include: State Grants, Urban Area Grants, Transit Grants, Fire Grants, and Port Security Grants.

TSA would receive $6.62 billion, an increase of $307 million over FY 2007. Major TSA initiatives receiving increases include $849 million for explosive detection systems for commercial aircraft and an additional $78 million for screening air cargo for explosives.

Customs and Border Protection would receive $8.8 billion, an increase of $797 million over FY 2007. In addition, CBP officers would be given law enforcement officer status at a cost of $50 million in order to aid the recruitment and retention of personnel.

Immigration and Customs Enforcement would receive $4.8 billion for an increase of $322 million over FY 2007.

There were some notable spending cuts as well. The Coast Guard's Deepwater program would receive $197 million below the request, reflecting Congressional concerns over a program that has had a multitude of managerial and technical problems.

Funding for departmental operations at DHS would receive no increase over FY 2007 resulting from carryover balances and spending projects perceived as wasteful.

Also of note, DHS emergency telecommunications programs would receive a $15 million cut resulting from Congressional concerns over management and planning.

The Committee passed bill also contains some important policy provisions, including a renewed effort to allow state and local governments to put stricter chemical security laws in place.

The President has threatened to veto the bill for the reasons explained in the Statement of Administration Policy.

Mil Con-VA:

Web Link: Committee Summary

$64.7 billion -- $4.0 billion more than President's request -- 22% increase over FY 2007.

The Department of Veterans affairs would receive $6.2 billion more than FY 2007 for a total of $43.2 billion.

In particular, the Veterans Health Administration would receive an increase of $4.4 billion over FY 2007, reflecting concerns over the mounting casualties returning from Iraq and Afghanistan.

Military Construction would receive $21.4 billion, an increase of $5.1 billion over FY 2007, primarily for BRAC and the first year of the planned 5-year increase in the size of the Army and Marine Corps.

Energy-Water:

Web Link: Commitee Summary

$31.6 billion -- $1.1 billion more than President's request -- 4% increase over FY 2007.

In general, the bill would cut funding for nuclear weapons and increase funding for research into energy efficiency and alternative energy sources.

The Office of Science at the Department of Energy would receive an increase of $716.8 million over FY 2007 for a total of $4.516 billion. This funding covers basic scientific research, including work on global climate change. Work on energy efficiency and alternative energy research would receive $1.9 billion in total, an increase of $400 million over FY 2007. An additional $708.8 million ($116.2 million increase over FY 2007) would be dedicated to reducing emissions from automobiles and power plants.

$6.671 billion would be directed to environmental clean up at the nation's nuclear sites, a $30.9 million cut from FY 2007.

The Army Corps of Engineers would receive $5.584 billion, an increase of $246 million over FY 2007.

DOE nuclear weapons programs would be cut $396 million from FY 2007 (total of $5.9 billion) reflecting concerns over the adequacy of research and planning on the nation's nuclear weapons policy.

Interior-Environment:

Web Link: Committee Summary

$27.598 billion -- $1.946 billion more than President's request - 4.5% increase over FY 2007.

The Environmental Protection Agency would receive $8.086 billion--$361 million more than FY 2007 and $887 million more than the President's request. Included in the bill is $266 million in funding for climate change research ($94 million increase over FY 2007).

The Department of the Interior would receive $10.163 billion, or $257 million over FY 2007.

The bill also includes an amendment from Maurice Hinchey (D-NY) that would prevent oil and gas companies from receiving federal oil and gas leases unless they begin paying royalties on current production or renegotiate their leases. This amendment comes in response to the ongoing Interior department scandal involving royalty relief granted to the major oil and gas producers. Hinchey press release

WORK CONTINUES ON AMT FIX

Work continues in the House on building support for a permanent AMT fix, with the goal of marking up a bill in July. (See WBR's Tax Tracker for background on AMT.) BNA reported yesterday that a draft plan would repeal the AMT for couples earning less than $250,000 annually and for individuals earning less than $125,000. The PAYGO requirement would be satisfied by imposing a surtax of 4-5 percent on individuals earning more than $500,000. The income thresholds would be indexed for inflation. Taking the lead on developing the plan is Select Revenue Measures Subcommittee Chairman Richard Neal (D-MA).

Meanwhile, Senate Finance Chairman Baucus is aiming for a 2-year patch covering tax years 2007 and 2008 and Ranking Republican Chuck Grassley is reportedly arguing that an AMT patch need not be paid for because its impact on middle income taxpayers was never intended-an argument unlikely to be accepted by Democrats who have staked much of their fiscal policy on the resumption of PAYGO rules.

What are the 10 major Tax Issues in the 110th Congress? Visit WBR's Tax Tracker.

BUDGET PROCESS: NO EARMARKS IN '08?

Earmark reform measures were adopted by the House and Senate soon after the convening of the new Congress in January of 2007. The House adopted a new rule (H.Res. 6, 110th Congress) requiring disclosure of earmark sponsors, as well as justifications for earmarks, and written certification that earmarks will not benefit their House sponsor.

Due to the time required to complete FY '07 appropriations in January and February, and enact a war supplemental during the spring months, Appropriations Chairman Obey says subcommittee chairmen and ranking members have not had time to review and decide on the thousands of earmark requests submitted by Members. Congressional Quarterly reported yesterday that House appropriators-subcommittee chairmen and ranking members-would jointly determine which earmarks to take to conference with the Senate and would publish a list in the Congressional Record before the August recess. Any Member could then question any earmark in writing and the earmark sponsor would have to respond, with the subcommittee leadership taking the exchange into consideration.

However, House Minority Leader John Boehner, in a web posting yesterday, said: "Republicans are declaring war on secret earmarks and wasteful spending, and will fight at every opportunity to force the majority to restore the reforms we enacted last year...that injected real transparency and real accountability into the budget process. These reforms required public disclosure of all earmarks and their sponsors contained in any bill, making the earmark process more open and transparent to taxpayers." Boehner statement

Obey told CQ: "If we get into a position where they're going to demagogue the earmarking process there will be no earmarks for anybody." Based on Democrats' cancellation of FY'07 earmarks, and the ongoing politicization of the issue, this may in fact be the outcome for FY'08.

NEW BUDGET DOCUMENTS:

CBO: Factors Underlying the Growth in Medicare's Spending for Physicians' Services. The rapid growth of Medicare and Medicaid are the principal factors in projected runaway deficits.

Panel: Balanced Budget: Holy Grail or Overrated? sponsored by Democracy: A Journal of Ideas. Features Lawrence Summers, Gene Sperling, and others. Available as a webcast (after 6 PM) on their website.