July 24, 2007 Farm Bill, SCHIP, Appropriations Move Forward
BUDGET PROCESS STEP-BY-STEP™ Link to WBR's Appropriations Status Chart Mon, July 23- Fri, July 27:
Tues, July 24:
Wed, July 25:
August 6:
October 1:
BUDGET RECONCILIATION: SENATE PASSES HIGHER ED BILL On July 20 the Senate passed its version of the Reconciliation legislation (H.R. 2669) by a vote of 78 to 18. The legislation would cut student lender subsidies by $18 billion over 5 years and uses the savings to increase federal aid to students and reduce projected deficits. The maximum Pell grant award, currently at $4,310, would be increased to $5,400 by 2011. In addition, funding would be increased for loan forgiveness. The bill would reduce 5-year deficits by $950 million, exceeding the Budget Resolution's required $750 million in savings. The House passed its version of H.R. 2669 on July 11 by a vote of 273 to 149. There are several significant differences between the House-passed and Senate-passed Reconciliation bills that will have to be resolved in conference. The House version increases the maximum Pell grant award to $5,200, compared to the Senate's $5,400. In addition, the House version would cut the interest rates on subsidized loans in half from 6.8% to 3.4% while the Senate instead uses the savings from reducing lender subsidies for increased loan forgiveness. The Bush Administration has issued a veto threat for the House version and expressed "serious" concerns about the Senate version.
SCHIP / MEDICARE PAYMENT LEGISLATION: Context: This year's FY 2008 Budget Resolution called for reauthorizing and expanding the State Children's Health Insurance Program (SCHIP), but did not provide any funding for expansion to cover more eligible children or to cover rising costs for existing enrollees. (The "Reserve Fund" mechanism allows for budget resolution spending levels to be increased for specific purposes-like SCHIP expansion-but makes those increases contingent on new spending being fully offset by tax increases or spending cuts.) SENATE: On July 19 the Senate Finance Committee approved by a vote of 17-4 a $35 billion reauthorization/expansion of SCHIP (see our SCHIP Backgrounder). Established in 1997 and due to expire on September 30, SCHIP provides health coverage to low income children not eligible for Medicaid. Baseline funding over the next five years is $5 billion per year, but in light of sharply increasing medical costs the program would have to begin dropping coverage for some of its 6.6 million recipients without increased funding. The bill approved by the committee would allow for an additional 3.2 million children from low-income families to receive coverage. The bill would also curtail use of SCHIP funds by the States for childless adults, parents, and pregnant women, in order to focus the funds on children. The SCHIP expansion would be offset by increasing Federal taxes on cigarettes to $1 per pack, a 61¢ per pack increase. The full Senate is expected to consider the bill this week. The Administration has threatened a veto of the Senate's $35 billion expansion of SCHIP. HOUSE: The House Energy & Commerce Committee will consider the "Children's Health and Medicare Protection (CHAMP) Act" as early as Wednesday, with possible Ways & Means action later in the week. The 3-part $90 billion mandatory spending bill would expand SCHIP by $50 billion. It would also spend $30 billion to avoid a scheduled cut in Medicare reimbursement rate for physicians, and would spend $10 billion to increase reimbursement rates for rural health providers. The costs of the $90 billion bill would be offset by a tobacco tax increase (although a smaller increase than the Senate Finance Committee bill at the insistence of tobacco state congressmen) plus cutting funds for Medicare Advantage, which is Medicare's private sector managed care alternative. According to Congress' Medicare Payment Advisory Commission (MedPAC), the Medicare program has been paying insurers who participate in Medicare Advantage an average of 12 cents more per beneficiary than traditional Medicare. House Minority Boehner's office has indicated they oppose the tobacco tax increase and the Medicare Advantage cut, the President would veto the bill, and House Republicans would prevent an override of the veto. AARP and the American Medical Association will reportedly support an advertising campaign in favor of the bill.
HOUSE MARKS-UP MULTI-YEAR FARM BILL, EXPECTED ON FLOOR THIS WEEK Context: A majority of agriculture spending is mandatory (entitlement) spending determined by the multi-year "farm bill" which is up for reauthorization this year. In FY 2007, out of the $19 billion in non-emergency agriculture spending, $8.3 billion was for the Commodity Credit Corporation, an entitlement program that operates farm price supports to stabilize farm income, and another $4.4 billion is for Crop Insurance (also mandatory spending) that subsidizes the purchase of insurance against crop failure. Other programs, subject to appropriations, are animal and plant inspection, agricultural research and education, and the foreign agricultural service which focuses on expanding international export opportunities. On July 19, the House Agriculture Committee passed the FY 2007 Farm Bill. The committee approved bill would make several major changes:
Floor action on the farm bill is expected to begin today. A controversial substitute amendment, sponsored by Rep. Ron Kind (D-WI), would dramatically cut subsidy payments and use the savings for conservation programs and deficit reduction.
APPROPRIATIONS ACTION House Passes Energy-Water On July 17 the House passed the FY 2008 Energy-Water appropriations bill after adding a $1.1 billion amendment setting forth earmarks for water projects and other items. In total, the bill includes $31.6 billion in spending, $1.1 billion more than President's request and a 4% increase over FY 2007. The President has threatened to veto the bill for exceeding his FY 2008 budget request. See our June 12 WBR for a complete summary of the committee reported bill.
House Passes Labor-HHS-ED On July 19, the House passed its FY 2008 Labor-HHS-Education appropriations bill. The $152 billion bill is $10.6 billion above the President's request and 4.9% above FY 2007 spending levels. The Administration has threatened to veto the bill for exceeding the President's request. Another issue that could prompt a veto is federal funding for family planning clinics, some of which are run by Planned Parenthood. Mike Pence (R-IN) offered an amendment (Pence press release) which would have prohibited Planned Parenthood from receiving family planning funding from the bill. According to Pence, Planned Parenthood receives almost a third of its revenues from the federal government for running these clinics. By a vote of 189-231 the amendment failed. (DeLauro press release on abortion) See our July 18 WBR for a complete summary of the committee reported bill.
House and Senate Appropriations Report Agriculture Appropriations House: $18.8billion - $1 billion above President's request - 5.9% increase over FY 2007 On July 19 both the House and Senate Appropriations Committees approved their respective FY 2008 Agriculture appropriations bills. With significant public concern over food and drug safety, increased funding for the FDA was included in both bills. The House bill would provide the FDA with $1.7 billion ($122 million over FY 2007 and $55 million over the request). The Senate bill, meanwhile, would provide $1.8 billion ($186 million over FY 2007 and $119 million over the request). Another important focus of both bills was the Women, Infants, and Children (WIC) supplemental nutrition program which provides vouchers for food packages, nutrition education, and health and immunization referrals to low-income, at-risk pregnant and post-partum women, infants, and children. The House bill includes $5.6 billion ($415 million over FY 2007 and $233 million over the request) and the Senate bill includes $5.7 billion ($516 million over FY 2007 and $333 million over the request). Increases are meant to address rising food prices as well as to expand the program. Country-of-origin labeling for meat has been a particularly contentious issue as consumer groups battle producers and processors debating the costs, merits, and necessity of implementing such a program. The 2002 farm bill called for increased food labeling, but so far action has been blocked due to cost concerns. Both the House and Senate bills approved July 19 would mandate country-of-origin provisions for meat beginning September 30, 2008. In addition, both bills provide funding for rural development and rural community enhancement programs including funding for rural housing, rural utilities, and clean water programs among others. Both the House and Senate provided for increases to these programs exceeding the President's request. NEW BUDGET DOCS Congressional Leadership: Letter from Harry Reid and Nancy Pelosi to President Bush requesting a meeting to discuss FY 2008 appropriations and the President's threat to veto bills that exceed his request. CBO: The Budgetary Costs of EGTRRA and JGTRRA Compared with Projected Deficits. This letter to House Budget Chairman Spratt estimates the cost of President Bush's 2001 and 2003 tax cuts at $195 to $215 billion in FY 2007, more than the projected deficit for this year. |
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| Charles S. Konigsberg, President | (202) 587-2984 (ph) | (202) 587-2983 (fax) | ckonigsberg@federalbudgetgroup.com | |