Senate Passes MilCon-VA and State-Foreign Operations Update on SCHIP, Farm Bill and Higher Education Reconciliation
BUDGET PROCESS STEP-BY-STEP™ Tuesday 9/4:
Thursday 9/6:
Friday 9/7:
Monday 9/10:
Wednesday 9/12:
September 30:
October 1:
APPROPRIATIONS UPDATE: SENATE PASSES MILCON-VA; STATE-FOREIGN OPs Military Construction-VA Appropriations : H.R. 2642 . On September 6, the Senate passed the FY 2008 MilCon-VA bill by a vote of 92-1. The measure would appropriate $64.8 billion, which is $4.1 billion over the President's request. Despite the higher spending level, the White House has not threatened to veto the bill (unlike the veto threats facing 9 of 12 appropriations bills). VA would get $3.6 billion more than the President requested and Military Construction would receive $600 million more than the President's request. The measure would provide $37.2 billion for the Veterans Health Administration, an increase of $4.5 billion over FY 2007. The bill also includes $100 million in “emergency” security funding for the 2008 political conventions in St. Paul and Denver. (Context: The emergency designation exempts the funding from the spending constraints set by the Congressional Budget Resolution.)
State-Foreign Operations Appropriations : H.R. 2764 . On September 6, the Senate passed the FY 2008 State-Foreign-Operations Appropriations bill by a vote of 81-12 . The bill would appropriate $34.4 billion, $ 700 million below the President's request. Despite coming in below the President's request, the White House has threatened to veto over language overturning a policy that bars U.S. funding of any international organization that performs abortions overseas. The biggest reductions from the President's request are in funding for the Millennium Challenge Corporation. The MCC (a fund that awards bilateral aid on a competitive basis to countries that have instituted economic and political reforms) would receive $1.2 billion ( $1.8 billion below the President's request and $352.3 million below FY 2007). Stated reason: MCC has not yet obligated $2.1 billion of funds available from previous years. The Department of State would receive $10.7 billion for its operations in 2008, a $1 billion increase over FY 2007 and $40 million below the President's request . Funding for international peacekeeping received a significant boost, with the bill including $1.35 billion ($245 million over the President's request and $216 million over FY 2007). Bilateral economic assistance would total $17.3 billion ( $516 million below the President's request ) with HIV/AIDS programs receiving the biggest increases.
The Big Picture on Appropriations : Most major legislation faces Presidential veto threats . The President has threatened to veto 9 of 12 appropriations measures because they exceed his budget requests. The Administration wants to limit total discretionary spending for FY 2008 to $933 billion; Congress' FY 2008 Budget allocated an additional $22 billion for discretionary funding. The Administration also objects to the Appropriators' shift of $1.7 billion from defense to non-defense spending. The Federal government hasn't faced a funding deadlock of this magnitude since 1995, when an impasse between then President Clinton and the Republican-led Congress over proposed cuts in Medicare, Medicaid, education and environment programs led to a Federal Government shut down. Veto Threats: (For more details and daily updates, see WBR: Appropriations Table)
UPDATE: HIGHER ED, FARM BILL, SCHIP Higher Education Reconciliation Conf. Report approved: Update: On September 7, Congress approved the Higher Education Reconciliation conference report (H.R. 2669), with the House voting 292-97 and the Senate 79-12 . The bill would:
According to Chairman Miller, although the President threatened to veto the House bill earlier he will sign the conference report. Republicans have criticized the bill for additional spending and creating new mandatory spending programs. Farm Bill: Update: Chairman Harkin has circulated a draft farm bill to members of the Agriculture Committee. Earlier in the year, Harkin called for restricting the size of subsidies. However, a leaked draft does not include subsidy reductions, instead continuing direct payments at current levels. The draft also includes language to ensure loan rates do not change more than 1% per year. 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 Programs. The starting point, or "baseline" for consideration of the Farm Bill projects what farm spending would be if there was a simple extension of current policies (i.e., policies set forth in the 2002 Farm Bill). The following table (source: CRS) shows Farm Bill actual spending over FY'02-'07, and the CBO (March 2007) baseline for the next 6 years:
The baseline spending levels reflect an increase in Food Stamps (which will grow automatically as the number of eligible beneficiaries increases and the price of food increases) and a reduction in commodity support due to the relatively high prices in current commodity markets. Congress' FY 2008 Budget Resolution allows for enactment of a new Farm Bill at baseline spending levels, plus an additional $20 billion-- but only if the $20 billion is deficit neutral (that is, fully offset by new taxes or mandatory spending cuts). H.R. 2419, passed by the House on July 27, would reform Food Stamp benefit rules to improve coverage of food costs and expand access; give farmers participating in the commodity programs a choice between traditional price supports and "market-oriented revenue coverage payments;" ensure that people making more than $1 million/year cannot collect conservation or commodity payments; and increase spending on conservation programs. The Administration has threatened to veto HR 2419 due to expansion of Davis-Bacon wage requirements, as well as objections to the spending reductions and taxes used to offset new spending above the baseline. SCHIP (State Children's Health Insurance Program) Reauthorization/Expansion: Update : Senate and House staff are pre-conferencing the House- and Senate-passed bills. The President has threatened to veto both versions. 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 is due to expire on September 30, and program expansion has been a major legislative goal of congressional Democrats. Baseline spending on SCHIP is currently $5 billion per year and the President's budget included a 5-year $5 billion expansion of the program. The FY 2008 Budget Resolution would allow expansion of the program by $50 billion over 5 years to cover more children who are eligible but not currently enrolled through a so-called "reserve fund." However, the additional spending must be fully offset with entitlement spending cuts or tax increases . On August 1, the House passed H.R. 3162, the Children's Health and Medicare Protection Act (CHAMP), by a vote of 225-204 . The bill would expand SCHIP by $47 billion over 5 years , as well as reverse scheduled reductions in Medicare physician payment rates over the next two years. CBO estimates the bill would add 5 million uninsured children to the current 6 million currently covered by SCHIP. The cost of the bill would be offset by a 45 cents per pack increase in the Federal cigarette tax, a reduction in payments to private sector Medicare Advantage (managed care) plans, and a new fee on private health insurance plans. On August 2, the Senate passed its SCHIP reauthorization/expansion by a vote of 68-31 the bill number, S. 1893, became H.R. 976 to comply with the requirement that revenue measures originate in the House). The Senate bill would expand SCHIP by $35 billion over 5 years, covering an additional 3.2 million children. The Senate would pay for the SCHIP expansion by increasing the Federal cigarette tax to $1 per pack (a 61-cents per pack increase). The Administration has threatened to veto both bills due to opposition to the tobacco tax increase, expanding the SCHIP program, and the House proposal to offset expansion by cutting subsidies to Medicare Advantage (the Medicare private managed care alternative). BUDGET DOCS CBO: The Budget and Economic Outlook, An Update CBO: Trends in Public Spending on Transportation and Water Infrastructure, 1956 to 2004 CBO: Assessing Pay and Benefits for Military Personnel GAO: Military Base Realignments and Closures: Observations Related to the 2005 Round GAO: Gulf Coast Rebuilding: Observations on Federal Financial Implications |
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| Charles S. Konigsberg, President | (202) 587-2984 (ph) | (202) 587-2983 (fax) | ckonigsberg@federalbudgetgroup.com | ||||||||||||||||||