July 18, 2007

OMB Releases Mid-Session Review
Mark-ups: SCHIP and the Farm Bill
Appropriations Action Continues

BUDGET PROCESS STEP-BY-STEP™

Link to WBR's Appropriations Status Chart

Wed, July 18:

State Children's Health Insurance Program (SCHIP) Reauthorization markup, Senate Finance Committee (rescheduled from Tuesday).

House continues consideration of Labor-HHS-Education (H.R. 3043)

FY 2008 Agriculture Appropriations (House full committee, 9am, 2359 RHOB)

House Agriculture Committee continues Farm Bill markup.

Check our website for daily schedule updates for all budget, appropriations, tax, and major authorizing legislation.

Context: While headlines often highlight these short-term projections, from a fiscal policy point of view the Federal budget remains on a dangerous long-term path that is unsustainable and perilous for the U.S. economy. The reasons: the explosive growth in Medicare and Medicaid and, to a lesser extent, Social Security.

FED Chairman Bernanke, this past January, warned the Senate Budget Committee that, because of rising entitlement costs, a "vicious cycle may develop in which large deficits lead to rapid growth in debt and interest payments, which in turn adds to subsequent deficits...Ultimately, this expansion of debt would spark a fiscal crisis...(T)he effects on the U.S. economy would be severe."

CBO Director Orszag testified this past June that "the United States is on an unsustainable fiscal path, and the primary determinant of the nation's long-term fiscal balance is health care costs."

GAO Chief David Walker underscored the long-term fiscal and economic perils, saying that "our long-term fiscal outlook is both imprudent and unsustainable...driven primarily by rising health care costs and known demographic trends."

See Facing Up to the Future: It's Time to Pay our Bills, a joint project of the Brookings Institution, the Heritage Foundation, and the Concord Coalition.

Mid-Session Review
White House Fact Sheet

Stat ement by Senate Budget Chairman Conrad
Statement by Senate Budget Ranking Republican Gregg

House Budget Committee Response
Statement by House Budget Ranking Republican Ryan

Heritage Analysis
CBPP Analysis

SENATE FINANCE COMMITTEE SCHIP MARK-UP

Context: The FY 2008 Budget Resolution (S.Con.Res. 21) contained a $50 billion "reserve fund" to permit adjustments in the Budget Resolution to accommodate SCHIP reauthorization and expansion, PROVIDED the costs are paid for by offsetting revenue increases or spending cuts.

July 18--Today, the Senate Finance Committee will markup up its "Children's Health Insurance Reauthorization Act of 2007." Markup was rescheduled from yesterday due to the Iraq Floor debate.

The State Children's Health Insurance Program (SCHIP), due to expire September 30, was established in 1997 to help states provide health coverage to children who are not eligible for Medicaid (see WBR's SCHIP Backgrounder). The draft bill would provide $35 billion of additional funding over the next 5 years to SCHIP. This would be a program increase above the $5 billion per year in the baseline. Funding would come from a 61 cent per pack increase in federal excise taxes on cigarettes as well as "proportional increases on other tobacco products."

The increased funding would continue coverage for the 6.6 million children currently receiving benefits (by covering increases in health care costs) AND would allow the program to expand, covering an additional 3.3 million children from low-income families. The bill would also refocus SCHIP on low-income children by moving childless adults currently receiving SCHIP coverage over to Medicaid as well as moving coverage for low-income parents to a separate block grant program.

Finance Committee Release
Chairman's Mark
CBO: Estimate of Changes in SCHIP and Medicaid Enrollment of Children
CBO: Estimate of Titles I through VI
JCT: Description of the Revenue Provisions
JCT: Estimated Revenue Effects

HOUSE BEGINS MARKING-UP MULTI-YEAR FARM BILL

Context: The bulk of Agriculture spending is mandatory (entitlement) spending under the direct spending jurisdiction of the House and Senate Agriculture Committees. This year, the House and Senate are considering a multiyear reauthorization of the "Farm Bill," which sets spending levels for direct spending programs and authorizes annually appropriated programs. Major farm bill mandatory spending programs include: the Commodity Credit Corporation (which operates 3 types of farm commodity payments to stabilize farm income and certain crop prices) and Crop Insurance (which subsidizes the purchase of insurance against crop failure).

In addition to programs aimed directly at supporting farmers, the farm bill contains a variety of other agricultural policy provisions. Conservation provisions which aim to preserve agricultural lands and rehabilitate degraded land play an important role in the farm bill as well as nutrition programs such as food stamps. The omnibus nature of the bill makes it of great importance in terms of setting the nation's agricultural and nutrition policy.

Collin Peterson (D-ND), chair of the House Agriculture Committee, faces dueling pressures from committee members wishing to preserve current levels of farm bill spending and from Members of Congress and the Bush Administration wishing to limit expenditures. Markup of the bill begins today and is expected to last 3 days. Check our website for daily updates.

House Agriculture Committee Farm Bill Page
H.R. 2419

APPROPRIATIONS ACTION

House Appropriations Reports Labor-HHS-Education
Web link: Committee Summary

$151.6 billion - $10.6 billion above President's request - 4.9% increase over FY 2007

The White House has threatened to veto this bill for exceeding the President's request.

HHS:

The National Institutes of Health would receive $29.7 billion, an $800 million increase over FY 2007 and a $1.1 billion increase over the President's request. This includes finding for all 27 institutes and centers comprising NIH.

The bill would provide $1.1 billion in funding for pandemic flu preparedness which would complete funding for the President's November 2005 request for $6.7 billion in funds.

Education:

In order to help students combat the skyrocketing costs of college, the maximum Pell grant award would be increased by $390 to $4,700. The grants would reach approximately 5.5 million college students.

Grants to local school districts for elementary and secondary education would total $14.4 billion, a half billion dollars above the President's request of $13.9 billion and a $1.1 billion increase over FY 2007. IDEA grants for special education would total $11.0 billion compared to the President's request of $10.5 billion and FY 2007 spending of $10.8 billion.

Other:

The Social Security Administration would receive $9.7 billion to cover their administrative expenses, $401 million over FY 2007 and $100 million over the President's request. The increases will help the SSA to decrease it's backlog of disability cases.

House Appropriations Reports Transportation-HUD
Web link: Committee Summary

$50.7 billion - $2.8 billion above President's request - 6.7% increase over FY 2007

Highway infrastructure programs make up the greatest portion of the bill and would receive $40.2 billion, an increase of $1.25 billion over FY 2007 and $631 million above the President's request--meeting the levels established in the highway authorization bill "SAFETEA-LU."

Airport modernization, safety, and efficiency programs would receive $3.6 billion, $85.5 million above FY 2007 and $850 million over the President's request. These programs aim to ease congestion at the nation's airports which have been experiencing increasing delays.

Amtrak would receive $1.4 billion in this bill, an increase of $106 million over FY 2007 and $600 million above the President's request. Funding for Amtrak, which requires substantial annual subsidies to continue operations, is a recurring issue on Capitol Hill.

The Public Housing Capital Fund would receive $2.4 billion for the maintenance and rehabilitation of public housing, an increase of $415 million over the President's request and equal to FY 2007 funding.

Community Development Block Grants would receive $4 billion, an increase of $228 million over FY 2007 and $963 million over the President's request. CDBG funds reach over 1,180 localities and promote community and economic development programs.

Section 8 Tenant vouchers (money to be used towards renting a private apartment) would receive $16.3 billion, an increase of $410 million over FY 2007 and $330 million over the president's request. The program provides housing vouchers to 1.9 million individuals and increased funding would allow for 4,000 new vouchers to be targeted to the non-elderly disabled and homeless veterans. Section 8 project voucher spending (money used towards living in project-based housing) would total $6.5 billion, an increase of $503 million over FY 2007 and $667 million above the President's request. This program provides affordable housing to 1.3 million poor families, many of whom are disabled or elderly.

Senate Appropriations Reports Transportation-HUD
Web link: Committee Summary

$51.1 billion - $3.1 billion above President's request - 7.4% increase over FY 2007

This bill would provide $40.2 billion for highway construction, an increase of $1.1 billion over FY 2007 and $630 million over the President's request.

Amtrak would receive $1.47 billion, an increase of $176 million over FY 2007 and $570 million over the President's request. Senate Democrats asserted that the President's recommended level of spending would bankrupt Amtrak and shut down an important public transit program.

$3.51 billion would be allotted to airport grants (equal to FY 2007 and $765 million above the President's request), providing infrastructure support to the nation's airports.

The Community Development Block Grants program would receive $3.77 billion, equal to FY 2007 and $735 million above the President's request. The CDBG program provides financial assistance for state and local government directed neighborhood revitalization and economic development activities.

Overall, $38.75 would be spent on Housing and Urban Development, an increase of $2.12 billion over FY 2007 and $3.15 billion more than the President's request. These funds include public housing assistance for the poor, disabled, and elderly (Section 8, etc.).

House Appropriations Reports Commerce-Justice-Science
Web link: Committee Summary

$53.6 billion - $2.3 billion above President's request - 6.4% increase over FY 2007

State and Local Law Enforcement and Crime Prevention Grants would total $3.2 billion, $334 million above FY 2007 and $1.7 billion above the President's request. These programs were cut from $4.4 billion in FY 2001, and a recent resurgence in violent crime nationwide has increased attention on crime fighting programs.

The FBI would receive $6.5 billion for its salaries and expenses, an increase of $509 million over FY 2007 and $148 million above the President's request. The increase will prevent hiring freezes and allow the hiring of an additional 272 agents for counterterrorism and criminal investigations.

The bill would provide a total of $28 billion in funding for science and science education programs, an increase of $2 billion over FY 2007 and $1 billion over the President's request. Programs relating to global climate change would receive $1.9 billion, or $164 million more than the President's request, and includes NASA, National Oceanic and Atmospheric Administration, and the National Academies' Climate Change Committee, and the National Science Foundation (NSF). The NSF would receive $5.14 billion for research activities, an increase of $474 million over FY 2007 and $8 million above the president's request. This increase is part of a plan to double NSF funding over the next 10 years. The NSF funds basic research, most of which is conducted at U.S. colleges and universities.

Senate Appropriations Reports Financial Services-General Government
Web link: Committee Summary

$21.8 billion - $122 million above President's request - 11.7% increase over FY 2007

A priority for this year's bill is to provide the means to reduce the "tax gap," the estimated $290 billion in taxes that go unreported and unpaid. IRS enforcement programs would receive $6.8 billion, equaling the President's request. Lastly, $2.1 billion would be directed towards taxpayer services (taxpayer clinics and taxpayer advocacy) for an increase of $11 million over FY 2007 and $46.1 million over the President's request.

The Executive Office of the President would receive $726.6 million, an increase of $6.7 million over FY 2007 and $10.7 million below the President's request.

Total funding for the Federal Judiciary, including mandatory spending, would total $6.3 billion, an increase of $357.5 million over FY 2007 and $174.3 million below the President's request.

The bill would provide $613.7 million in funding for the District of Columbia, an increase of $22.7 million over FY 2007 and $16.1 million over the President's request. In addition, the bill would approve DC's local budget of $9.77 billion.

The President requested a 3% pay raise for federal employees, however this bill would provide a 3.5% raise.

NEW BUDGET DOCS

Congress: July 13 LIHEAP Letter from 39 Senators to the Administration requesting the release of LIHEAP contingency funds in response to the recent national heat wave.

CBO: Testimony on the Taxation of Carried Interest (relating to the taxation of profits at private equity firms and hedge funds)

CBO: Testimony on the Status of the Airport and Airway Trust Fund