The federal government borrows money by issuing bonds.  About one-third of that debt is held within the government, by the Social Security Trust Fund.  Of the rest of the debt, nearly one-half is held by foreign governments; the remainder by corporate, pension fund, and other private financial interests.  The U.S. Treasury borrows enough to fill the gap between revenues collected and obligations to spend (that is, the deficit).  Despite the fact that Congress approves federal spending, it separately sets in statute limits on how much the federal government can borrow.

If the federal government hits up against the statutory ceiling on debt and Congress refuses to raise it, the federal government would not be able to spend more than the revenues it takes in each month.  H.R. 807 sets priorities for which bills to pay, placing bondholders at the front of the line.  Those who have bought U.S. bonds would be paid their principal and interest, and the Treasury would be authorized to exceed the limit on borrowing if necessary to prevent any default on bonds.  The bill was amended to add federal bonds held by the Social Security Trust Fund to its “must-pay” list.  By prioritizing repayment of funds borrowed by the federal government from the Social Security Trust Fund, it would make it make it possible to keep paying Social Security benefits without interruption.

H.R. 807 would not prevent the federal government from reneging on its other funding commitments, however, if the debt ceiling were not raised by Congress.  This legislation would in effect re-set the priorities established by Congress when it passes any legislation related to funding.  Bondholders and Social Security come first; everything else government does, from Medicaid to transportation to nutrition aid, is funded in part or not at all.

The Obama Administration issued a statement promising to veto this legislation if it made it to the President’s desk.  The Democratic leadership in the Senate has also voiced opposition.  However, Senator Pat Toomey (R-PA) previously introduced the Ensuring the Full Faith and Credit of the United States and Protecting America’s Soldiers and Seniors Act (S. 46) which he will seek to move as a stand-alone bill or attached to other legislation.  It has three items on its “must-pay” list – bondholders, Social Security bonds and beneficiaries, and military salaries.  As with H.R. 807, the Treasury would be allowed to borrow, even if it exceeds the existing debt ceiling, in order to pay these obligations.  The Senate Democratic caucus is not expected to support this legislation either.

There is reason to doubt that continuing to pay bondholders and a few powerful constituencies will end the risk to U.S. fiscal stability if Congress refuses to allow borrowing to pay its other bills.  When Standard and Poor’s downgraded the federal credit rating in 2011, it did so because it felt the stalemate that left us uncomfortably close to default made the federal government “less stable, less effective and less predictable” in its financial management.  New cliff-hanging negotiations threatening massive non-payment of bills and salaries will not be seen as a boon to stability and predictability.

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The furloughs of air traffic controllers were the result of sequestration, the across-the-board automatic cuts triggered when Congress was unable to agree on a more sensible plan for deficit reduction.  The sequester was meant to be a thoroughly unappealing means of cutting about $1.2 trillion through FY 2021, with cuts equally assigned to the Pentagon and to domestic programs.  Initially set to kick in on January 1, 2013, Congress replaced the first two months of these cuts in hopes of a last ditch effort to come up with an alternative.  Enough Republicans decided they could tolerate the military cuts, so no deal, and sequestration took effect at the beginning of March.  (For background on sequestration, see Senseless Cuts Begin in the March 4, 2013 Human Needs Report.)

The President and Congressional Democrats continued to call for a comprehensive replacement of the sequestration cuts. Senate Majority Leader Reid (D-NV) offered legislation in the week before recess to stop the FY 2013 cuts, paying for them with savings from ending the Iraq and Afghanistan wars.  But a bipartisan group of Senators abandoned the call for a comprehensive solution to carve out the airport fix.  The bill passed in the Senate was sponsored by Senator Susan Collins (R-ME), with 15 co-sponsors including six Democrats (Begich-AK, McCaskill-MO, Nelson-FL, Rockefeller-WV, Udall-CO, and Warner-VA).  Similar legislation had been previously co-sponsored Senators Klobuchar (D-MN) and Hoeven (R-ND).  The Administration caved too:  spokesman Jay Carney told reporters that the President would “be open to looking at” separate legislation to allow the FAA to move money around to end the furloughs.

In passing legislation that let the FAA spend less on infrastructure improvements and shift those funds to pay the air traffic controllers, Congress was coming closer to the approach of a number of Republican-sponsored bills.  S. 799, co-sponsored by Senators Inhofe (R-OK) and Toomey (R-PA) would give the Obama Administration until May 15 to come up with alternative cuts for all of sequestration, but would not reduce the total amount to be cut.  The White House and Senate Democrats have strongly opposed this approach, saying that it is impossible to cut $85 billion in this fiscal year without doing harm, and sparing some programs will only result in even more unacceptably deep cuts in others.  The FAA could choose to put off building projects, even though that hurts jobs now and will constrain economic growth in the future.  Most other programs do not have funds to invest in infrastructure, so this choice is not even an option.

In a minor footnote to Congress’ haste to adopt this legislation, a typo made it necessary for the bill to be taken up one more time for form’s sake in the Senate.  This occurred on April 30, and the bill is now on its way to the President’s desk.

While the President will sign this legislation, he has continued to point out the harm of allowing cuts to proceed for vulnerable children seeking Head Start and other programs that affect the health and life chances of hundreds of thousands of people.  But every time a powerful interest is able to carve out its own fix, the chance of getting agreement on ending sequestration is diminished.

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The Politics.  The President’s budget includes $166 billion in job creation initiatives, investing in infrastructure improvements, clean energy, and a comprehensive re-building approach in 20 poor communities.  It commits modest funding towards all levels of education in addition to the early childhood initiative.  But by using the budget as a platform to put forward a deficit reduction offer already made to Speaker Boehner (R-OH) and rejected by him, it makes cuts in Social Security strongly opposed by most Democrats and raises less revenue than the Senate budget plan.  As a gambit to demonstrate his willingness to compromise and to smoke out Republican unwillingness, the budget seems to have worked.  Pundits praised the elements of compromise and Republicans scrambled away from previous support for the Social Security change in order to stay firmly opposed to the President.  (Last December, Bloomberg News reported that Speaker Boehner was “pressing harder for the CPI revision than for other entitlement changes…”  Senate Minority Leader McConnell (R-KY) was looking for higher Medicare premiums for upper-income retirees, raising the age to become eligible for Medicare, and reducing Social Security benefits by shrinking the adjustment for inflation (the “chained CPI”) in order to consider new revenue last winter.)  But although the President included the reduced inflation adjustment and higher Medicare payments for upper-income retirees, his budget was rejected out of hand by the Republican leaders.

The President has said that he will only agree to cut Social Security as part of an overall deal that increases revenues and includes some economic investments.  But many strong advocates for Social Security and other vital safety net programs strongly oppose the Social Security cut under any circumstances.  Even those who could imagine it as part of a plan with healthy doses of revenue and job creation are worried now that the Social Security cut will find its way into a far less helpful budget plan.

The Math.  The President proposes $3.78 trillion in spending and $3.03 trillion in receipts for FY 2014, leaving a deficit of $744 billion, down from a deficit of $973 billion this year.  The deficit will decline from 6 percent of GDP now, to 4 percent in FY 2014, and down to 1.7 percent of GDP in 2023.

Revenues.  The budget includes $583 billion in revenue increases over 10 years from limiting high-income deductions to 28 percent and from increasing taxes on millionaires.  It adds another $100 billion in revenues from the chained CPI proposal’s effects on tax payments, and adds $78 billion in tobacco taxes to pay for the early childhood initiative.  In a move disappointing to many human needs advocates, the President’s budget lists a large number of corporate tax loophole-closings, but holds them in reserve to pay for an unspecified reduction in corporate tax rates.  Advocates are seeking a net increase in revenues from any corporate tax reform agreement, but the President would make reform revenue-neutral.

Spending Overview:  The President’s budget would replace the multi-year cuts that started this year with sequestration with the new revenue, plus about $400 billion in health care savings (largely Medicare), $130 billion from spending cuts due to the chained CPI reduced inflation adjustment, another $200 billion in savings in other mandatory programs (such as farm subsidies), and $200 billion in appropriations cuts, split evenly between the Pentagon and other programs.  By reducing the deficit, interest payments will decline by $210 billion over the same 10-year period.  Together, the revenues and spending cuts will reduce the deficit by $1.8 trillion.  The Administration estimates prior deficit reduction at $2.5 trillion; adding in his new budget proposal, deficit reduction would total $4.3 trillion over 10 years.

Budget Comparisons:  The President’s budget raises less revenue than the Senate’s $975 billion from progressive sources over 10 years.  The President’s plan cuts mandatory spending more ($600 billion in health care and other savings); the Senate’s mandatory savings total $350 billion.  The President cuts discretionary spending (appropriations) less than the Senate.  The Senate cuts $240 billion from the Pentagon, compared with $100 billion in the President’s budget.  The Senate cuts domestic and international appropriations by $142 billion, compared with the President’s $100 billion.

The Administration’s and Senate’s plans both differ starkly from the House budget, which includes no net revenue increases, and cuts spending by about $5 trillion, plus another $700 billion in interest savings.  The Pentagon is not cut.  About two-thirds of the cuts affect low-income programs, including deep cuts in Medicaid and SNAP/food stamps.  (For more details about the House and Senate budgets see the March 18 Human Needs Report.)

Details on Low-Income Programs in the President’s Budget:

Early Childhood:   The $75 billion 10-year Preschool for All proposal to ensure that every low- and moderate-income four year old gets pre-kindergarten education is joined by $1.4 billion next year for Early Head Start and child care partnerships to increase high quality early learning programs for infants and toddlers through age three.  Further supporting young families, the budget would expand voluntary home visiting services for families with newborns, with $15 billion over ten years, starting in FY 2015.

Aid to Poor Communities:  The President’s budget attempts a comprehensive approach, putting together resources from multiple government agencies to attack both the causes and toxic by-products of poverty.  It would create 20 Promise Zones, coordinating housing, education, anti-violence, and other economic development initiatives.  The Choice Neighborhoods Initiative would provide $400 million to improve distressed HUD-assisted housing in very poor communities (up from $120 million this year).  Homelessness Assistance Grants are increased by about $350 million, not counting the extra across-the-board cuts now being made.  Apart from the early childhood education expansions, there are initiatives to improve high schools and to invest in community colleges, both targeted to low-income community needs.  Related to the Administration’s push to reduce gun violence, the budget includes $160 million in new funds for Project AWARE, providing for more trained mental health providers able to work with children and youth in school, as well as more public safety support in poor communities.

The budget repeats the President’s $12.5 billion Pathways Back to Work proposal, which would fund summer and year-round jobs and training for low-income youth and provide subsidized jobs and training for the long-term unemployed.  This initiative was part of the President’s unsuccessful American Jobs Act proposal last year.  In part, it builds on the success of subsidized jobs funded through a now-expired Temporary Assistance for Needy Families emergency fund, in which hundreds of thousands of temporary jobs were created.

There are broader job creation initiatives, with funding to rebuild infrastructure, invest in clean energy, and create manufacturing hubs.  These are not specially targeted to help the poor, but overall efforts to create jobs will be a help, especially if the Administration connects job training for low-income workers to these new plans.

Reverses SNAP Cuts:  Millions of poor people are now facing a reduction in SNAP/food stamp benefits scheduled to start in November.  The President’s budget would cancel that loss in food assistance, estimated to cost a family of three $20-$25 a month.  In another critical area where the budget at least partially reverses cuts to low-income programs, rental housing vouchers for low-income families are increased by more than $1 billion.  The automatic cuts now in effect could reduce the number of vouchers going to low-income families by 140,000, out of 2.2 million households now benefiting from this form of housing assistance.  The President’s budget would end these cuts.

Makes Low-Income Tax Credits Permanent:  While the last deficit reduction deal made the Bush tax cuts permanent for all but the richest 1 percent, the low-income tax credits were only extended for five years.  The Obama budget makes the current levels permanent for the Child Tax Credit, Earned Income Tax Credit, and the American Opportunity Tax Credit (the latter for college students).  The Child Tax Credit and EITC lifted more than 9 million people out of poverty in 2011.  However, the chained CPI proposal will reduce the value of the Earned Income Tax Credit over time.

Protects Health Coverage:   The budget protects Medicaid and the Children’s Health Insurance Program.  It continues implementation of the Affordable Care Act, showing states that they can count on the promised federal support for expanding their Medicaid programs.

Cuts to Low-Income Programs:  Unaccountably, despite the Administration’s emphasis on interconnected programs to maximize effectiveness, the budget repeats its proposal to slash the Community Services Block Grant to $350 million (down from $682 million this year, not counting the across-the-board cuts).  These funds support community action agencies nationwide, which administer Head Start, home energy assistance, emergency food, and local economic development and other anti-poverty initiatives.  These agencies leverage private dollars and do the kind of coordination of services the Administration is counting on.  The budget also cuts the Low Income Home Energy Assistance Program (LIHEAP) by more than $500 million, counting this year’s across-the-board cuts.

Scope:  By choosing to stick to the deficit reduction offer made and rejected last year, the budget cannot support enough job creation and economic development to meet the needs of the current weak economy.  There is no doubt that there is strong opposition to making the needed investments.  But just as President Obama’s leadership has maximized public support for gun legislation and helped to shape public support for immigration reform, his leadership in pressing for jobs and shared prosperity will matter.

The post CHN: The President’s FY 2014 Budget: Important Initiatives Face Uphill Battle appeared first on Coalition on Human Needs.

The sequestration cuts were necessary because of another provision of the Budget Control Act.  Congress was supposed to come up with a plan to reduce the deficit by another $1.2 trillion over ten years.  If Congress was unable to agree on such a plan, automatic cuts would be triggered – half from defense and half from domestic or international programs.  Because Congress failed to act, sequestration for FY 2013 took effect on March 1.  Unless Congress intervenes to repeal or replace the sequester and 8 more years of spending cuts, for FY 2014 – FY 2021, $1.2 trillion more in cuts will result.  Advocates hoped that the expiring CR would be used as a vehicle to repeal or replace this second set of cuts but that has not happened.  (See March 4 Human Needs Report for more on the sequester.)                     

As a result of sequestration the federal government is being asked to absorb $85 billion in further cuts in FY 2013.  The kind of federal spending that requires annual appropriations – called “discretionary” – would take a cut of $59 billion.  The sequester also cut programs not funded under the appropriations bills including war spending by $6 billion, emergency funding (e.g. Sandy storm recovery) by $2 billion, disaster relief by $1 billion, and mandatory programs including Medicare by $17 billion.

Some of those cuts are beginning to be felt, from children taken out of Head Start programs to a nearly 11 percent cut in unemployment compensation starting April 1.  (See the first weekly Sequester Impact Report for March 5-13.)

When H.R. 933 came to the Senate, Appropriations Committee Chairwoman Barbara Mikulski (D-MD) and Ranking Member Richard Shelby (R-AL) chose to change it by adding three more full spending bills – Agriculture, Commerce-Justice-Science and Homeland Security – leaving 7 unfinished bills funded under the CR.  The Senate bill includes over 80 anomalies to address needed changes in agencies funded under the CR.   Some of those were also in the House bill, such as language needed to continue a pay freeze on federal employees.  The Senate bill adds more funding for the public housing operating fund, rental vouchers and homeless assistance in HUD not included in the House bill.  The Senate adds more funding to some agencies and decreases it for others while maintaining the $984 billion overall funding level.  Areas that receive more funding under the Senate bill include Agriculture, Financial Services, and Transportation-Housing and Urban Development.  Those that lose funding include Commerce-Justice-Science, and Interior-Environment.

Senator Tom Harkin (D-IA) offered an amendment to the Senate bill that would have included a full appropriations bill for FY 2013 to replace the CR provisions for Labor, Health and Human Services and Education.  His amendment called for an increase in funding for some education, health and labor programs.  The increases had been agreed to by the House and Senate during informal negotiations in December but the bill wasn’t included among the new spending bills Senators Mikulski and Shelby chose to include in the substitute.  The amendment was subject to a 60-vote threshold and failed 54-45 along party lines.  An amendment sponsored by Senator Ted Cruz (R-TX) to bar funding for implementing the Affordable Care Act also failed along party lines 45-52.

At press time the Senate was unable to finish the bill due to the inability to agree to a reduced set of amendments that would be allowed a vote.  When the Senate completes work, the bill will go back to the House, which has indicated that it will accept the Senate bill if it maintains the $984 billion spending level and includes no unacceptable changes.

Advocates continue to press members of Congress to repeal the $85 billion sequester which is already beginning to negatively impact human needs programs.  The opportunity may still come as members begin to feel pressure from constituents concerned about the impact of the cuts.

The post CHN: Funding for FY 2013 Pending in the House and Senate appeared first on Coalition on Human Needs.

House Budget Committee Chair Paul Ryan (R-WI) got party line (22-17) approval of his Budget Resolution in Committee on March 13; the next day Senate Budget Committee Chair Patty Murray (D-WA) secured a similar party line vote (12-10).  Both the House and Senate will take up their budget proposals during the week of March 18 in hopes of approving them before recessing at the end of the week.  Recent legislation required the House and Senate each to pass its budget by April 15 or each legislator would forfeit his or her pay.  But there is nothing to force the House and Senate to agree on a final joint resolution, and a policy chasm separates the two.

Revenues.  The House plan is notable both for what it says it will do and for what it leaves out.  Its $5.7 trillion tax cut is pretty specific:  it proposes to drop the individual income tax down to just two brackets, 10 and 25 percent.  It reduces the corporate income tax rate to 25 percent, repeals taxes enacted as part of the Affordable Care Act, and repeals the Alternative Minimum Tax.  Together, according to the Brookings-Urban Institute Tax Policy Center, those massive reductions add up to $5.7 trillion.  Reducing the top rate from its current 39.6 percent down to 25 percent provides mammoth tax cuts to millionaires, who stand to gain an average of at least $200,000 each just in 2014, in an analysis by Citizens for Tax Justice.  The House budget proposal is also specific in saying that its tax changes will be revenue neutral.  But other than a general statement about closing tax loopholes, it says nothing about how tax cuts as large as $5.7 trillion would be made up.  It is clear, though, that there are not enough loopholes for rich individuals to offset the cost of the huge income tax rate reduction, especially if Chairman Ryan keeps to his stated intention not to increase taxes on capital gains or dividends.  Citizens for Tax Justice estimates that even if millionaires lose every single one of their tax expenditures, they would still gain over $200,000 from the proposed tax rate reduction.  That means the only way to pay for the rate reduction would be to raise taxes on low- or middle-income taxpayers.

The Senate’s budget plan includes $975 billion in tax increases over ten years.  It does not specify the precise nature of the tax increases, except to say that it is the intent of the Committee that the increases come from the wealthiest individuals and from large corporations.  The budget includes a fast track procedure called “reconciliation” for consideration of increased revenues.  In this case, the Senate Finance Committee will be given instructions to come up with a set of revenue-raising proposals totaling $975 billion, and must report its proposal to the full Senate by October 1.  The budget discusses at length the opportunities for increasing revenues by reducing tax expenditures that provide the greatest benefit to upper-income taxpayers, without specifying which should be reduced or eliminated.  It is specific in suggesting placing limits on the value of tax deductions or other preferences for the top two percent, and recommends reducing business tax loopholes.

Spending Reductions.  The House budget makes extreme cuts both in mandatory programs including Medicaid and SNAP/food stamps and in discretionary programs such as education, housing, social services, environmental and consumer protection, and some nutrition assistance.  Its aim is to shrink the federal role, and does so by turning Medicaid and SNAP into block grants, drastically cutting the funding of each.  The proposal cuts Medicaid and the Children’s Health Insurance Program by $756 billion over ten years.  It cuts other mandatory programs by nearly $1 trillion more, without specifying where those cuts would occur beyond SNAP.  Those cuts would necessarily hit low-income people hard, since these other mandatory programs prominently include Supplemental Security Income (SSI) for poor elderly and disabled, child nutrition programs, unemployment insurance, child care, Temporary Assistance for Needy Families (TANF), and child welfare services.   In addition, the budget would repeal the health care reform law, ending the subsidies for health insurance and the Medicaid expansion called for in that legislation.  The budget turns Medicare into a voucher program which starts to take effect in 2024.  Analyses of last year’s Medicare “premium support” voucher plan showed that the savings projected for the federal government would be achieved by passing higher costs on to Medicare beneficiaries.

The House budget retains the cuts imposed by sequestration for domestic programs, and then cuts the domestic discretionary programs another $700 billion.  In contrast, it stops the sequestration cuts for the Pentagon, spending about $500 billion more on defense than would have been allowed under the Budget Control Act.

In all, the Center on Budget and Policy Priorities estimates that about two-thirds of the House spending cuts will target programs for low- or moderate-income people.

The Senate Budget Committee plan replaces the cuts that begin with sequestration in FY 2013 and continue through FY 2021 with $240 billion in Pentagon savings, $275 billion in health care savings, $76 billion in other mandatory program savings, $142 billion in domestic discretionary program reductions, and $242 billion in reduced interest payments, for a total of $975 billion.  Advocates had hoped the Senate plan would have spared domestic discretionary programs entirely, since they have already been cut substantially in the first deficit reduction round.  The budget narrative says that the health care savings (expected to be primarily in the Medicare program) will not be achieved by reducing benefits or eligibility, but by systemic savings such as negotiating for lower prescription drug prices.

Further Action in the Senate.  Under Senate rules, budget resolutions are adopted with a simple majority; debate is limited to 50 hours and the budget cannot be filibustered.  However, unlimited amendments are possible.  When all time for debate has expired, the Senate takes up amendment after amendment with no debate – known in Senate speak as “vote-a-rama.”  Advocates will be wary about amendments that could undermine the constructive approach of the Senate Budget Committee’s budget in the ensuing fast action.

Alternative Budgets.  The proposals developed by the House and Senate Budget Committees are not the only budgets prepared by members of Congress.  The House Congressional Progressive Caucus and Congressional Black Caucus have each developed an alternative approach.  Both make substantial investments in job creation and increase revenues far more than the Senate Budget Committee plan.  The Progressive Caucus budget would create 7 million jobs in the first year (in marked contrast to the House Budget Committee version, which is estimated to lose 2 million jobs over the same time period).  The Progressive Caucus budget also cuts the Pentagon while increasing funding for domestic priorities.  In addition, the House Budget Committee Democrats are expected to develop an alternative, also likely to increase revenues from fair sources and to protect human needs programs.  At press time, it was not yet known whether Senate Republicans would be releasing their own alternative.

The post CHN: Starkly Different House and Senate Budget Plans Offered for FY 2014 appeared first on Coalition on Human Needs.

For weeks, it seemed a foregone conclusion that Congress would fail to agree on a way to replace these cuts by the March 1 deadline.  Negotiations among the Administration, House and Senate were non-existent.  But in the weeks approaching the deadline it was assumed that if cuts began to occur after March 1, pressure would intensify and a way to replace the cuts would be found in tandem with the next big deadline:  when the temporary spending bill covering all appropriations expires on March 27.  Instead, on March 1, the President met with House and Senate leaders and signaled that he was not interested in risking a government shut-down at the end of March.  Both the President and Senate Appropriations Chair Barbara Mikulski (D-MD) expressed the intention to handle the continued funding for FY 2013 appropriations separately, and few Republicans at this point would consider replacing the cuts if it means increasing revenues, no matter what the source.  While a loud outcry from the public once the cuts are felt could change the odds in Congress, right now the prospects for derailing the cuts before the end of the fiscal year are murky at best.

In a recent Senate Appropriations Committee hearing, witnesses from the Obama Administration were unified in their testimony that granting the Administration flexibility to move money around to reduce the indiscriminate nature of the across-the-board sequester cuts would not solve their problems.  But before the first full business day of living with sequestration had arrived, the Administration’s director of the Economic Policy Council, Gene Sperling, noted on weekend interview shows that the Senate would take up legislation to provide the Administration with more leeway to manage the cuts.  How that would affect the full range of human needs programs affected is not yet known.

The Sequester’s Beginnings.  Congress included sequestration – or across-the-board cuts in all but a number of exempted programs – in its deficit reduction legislation, the Budget Control Act of 2011.  The law set 10 years of appropriations caps, projected to save about $1.5 trillion through FY 2021.  Congress was supposed to agree on a plan to reduce the deficit another $1.2 trillion, which could be achieved by a combination of revenue increases and spending cuts.  To force itself to act, Congress included an enforcer – automatic cuts that would kick in if Congress could not agree on a plan.  Those cuts would be split 50-50 between Pentagon and domestic/international programs.

Congress had more than a year to come up with an alternative to cuts that would hit WIC nutrition, Head Start, public housing, unemployment benefits for the long-term unemployed, education, environmental and consumer protection, medical research, job training, air traffic and food safety, and a whole lot more.  The President and Congressional Democrats called for new revenues to play a part in replacing these cuts.  Congressional Republican leaders said no.

The House leadership pointed to legislation it had passed twice in 2012 to replace the sequester – which slashed SNAP/food stamps, Medicaid, the Affordable Care Act, federal employee benefits, the Child Tax Credit and other services.  House leaders said they would not do anything else, and would await action by the Senate.

The Senate was stymied by the fact that legislation can be held up by a minority, requiring 60 votes to pass most bills.  A sequester-replacement plan could not pass without bipartisan support, and it was not forthcoming.  Senate Democrats, led by Majority Leader Harry Reid (D-NV), Budget Chair Patty Murray (D-WA) and Appropriations Chair Barbara Mikulski (D-MD) developed the American Family Economic Protection Act (S. 388), which increased revenues by increasing taxes on millionaires and closing certain corporate loopholes, reduced farm supports, and made Pentagon cuts more gradual, while eliminating all the slated domestic cuts.  Senate Republicans introduced their version of sequester replacement (S. 16), which gave the President until March 15 to come up with other ways to cut $85 billion, without shifting cuts from domestic areas to the Pentagon or raising revenues, and giving Congress the opportunity to object to the President’s proposals.  Both bills were unable to overcome the hurdle of cutting off debate in order to get to an actual vote on the legislation when Congress took them up on February 28.  The vote to cut off debate on the Democrats’ bill was 51-49, 9 short of the 60 needed.  No Republicans supported moving forward with this bill; 3 Democrats also opposed it:  Hagan (D-NC), Landrieu (D-LA), and Pryor (D-AR).  In addition, Majority Leader Reid voted no in order to preserve the right to bring the bill up again.  The other three Democratic opponents objected to the reduced farm payments and/or some of the tax provisions.  The Republican alternative had far less support, with its own caucus divided about it.  It failed 38-62, with 9 Republicans voting “no” and 2 Democrats – Baucus (D-MT) and Warner (D-VA) – voting “yes”.  Republican opposition tended to center on seeing the bill as ceding legislative power to the President.

No Government Shutdown Now Expected Over FY 2013 Appropriations.  The House of Representatives plans to act on legislation during the week of March 4 to approve appropriations for the rest of the fiscal year (through the end of September).  It will start with the $1.043 trillion cap for total appropriations, as already established by Congress, and then subtract the domestic discretionary portion (some of the cuts are to mandatory programs) of the $85 billion in sequestration cuts, resulting in a $974 billion bill.  That is the level of funding the House had sought for FY 2013 appropriations last spring, but at that time was successfully opposed by the Senate and Administration.  The plan assembled by House Appropriations Chair Harold Rogers (R-KY) is expected to continue existing funding levels for most parts of government through an extended Continuing Resolution (C.R.), but to enact separate two full appropriations bills for Defense and Military Construction-Veterans Affairs.

The Senate Appropriations Committee is also at work on completing FY 2013 funding, but Chairwoman Mikulski (D-MD) is preparing an Omnibus bill.  Instead of extending mostly level funding in a Continuing Resolution, an Omnibus bill would incorporate 12 separate detailed appropriations bills.  These differences between the House and Senate approaches complicate the efforts to agree on final legislation.  Since Congress has a recess period scheduled for the week of March 25, the House and Senate must agree on the appropriations package by March 21 or 22.

While the President had previously stated he would veto any appropriations bill that was less than the $1.043 trillion cap, over the weekend he clarified that he would not veto a bill that encompassed the sequestration cuts.  Bipartisan comity is not easy to find, but it does extend to a reluctance to risk a government shutdown.

The post CHN: Senseless Cuts Begin: Wide Swath of Domestic Services and Pentagon Spending Will See $85 Billion Reduction This Year appeared first on Coalition on Human Needs.

The deal, brokered between Majority Leader Harry Reid (D-NV) and Republican Leader Mitch McConnell (R-KY), included several changes. Key among them, the hours of debate that had been used to stall simply taking up a bill were limited.  Now, when the Senate invokes cloture (that is, when the Senate gets at least 60 votes to limit debate) debate on a motion to proceed with the legislation will be reduced from a maximum of thirty hours to four. In exchange, Republicans will now have the option of offering two amendments to the bill. Previously for some legislation there was no opportunity to offer amendments.  This modest reform does not prevent 30 hours of post-cloture debate on a final vote on the bill, but allows action on the bill to start without lengthy delay.  Motions to proceed can also be taken up without delay and without the promise of amendments if Leaders Reid and McConnell, along with an additional 7 Republicans and 7 Democrats agree.  This specific change is a standing order, meaning it is only valid during this session of Congress.

In addition, Senator Reid also convinced Senator McConnell to streamline the confirmation process for district court judicial nominees by shortening the post-cloture debate time from thirty hours to two hours.  For most other nominations, with 60 votes to invoke cloture, debate will now be limited to no more than 8 hours.  Thirty hours of post-cloture debate will remain an option for circuit judges and Supreme Court nominees.

While these changes were far more significant than the unofficial “hand shake agreement” last Congress, they stopped far short  of the substantial reforms championed by Senators Jeff Merkley (D-OR), Tom Harkin (D-IA), and Tom Udall (D-NM), with the support of Fix the Senate, a coalition of labor and advocacy groups who favored a much stronger package of rule changes. Chief among their proposals was an end to the silent filibuster, requiring obstructing Senators to actually stand on the Senate floor and talk. They also hoped to flip the burden of filibustering onto the minority, requiring at least 41 members to be present in order to maintain a filibuster, rather than forcing the majority to muster 60 Senators to end one.

Fix the Senate and supportive Senators hoped to invoke what they called the “Constitutional Option” to pass a more extensive set of rule changes. Although Senate rules typically require a 2/3 supermajority to amend Senate procedure, reformers argued that the Constitution allows for a simple majority to change the rules at the start of each session. The threat of the Constitutional Option and subsequent precedent is largely what motivated Senator McConnell to agree to a smaller, bipartisan package of reforms.

Some critics feel that deal does not sufficiently crack down on filibuster abuse and obstruction.  Others, particularly members of the Democratic leadership in the Senate, praised the change and expressed worry about further polarizing an already divided Congress.

“If [the Constitutional Option] were used, if it had to be used, it would have turned a gridlock into a meltdown,” said Sen. Carl Levin (D-MI). “The Senate would have had a meltdown.”

Despite the disappointment that the rules changes were not broader, even the most ardent supporters of limiting the filibuster hope that the new rules will increase the Senate’s effectiveness.

The post CHN: The Senate Approves Changes to the Filibuster Rule appeared first on Coalition on Human Needs.

The cuts would include $31.4 billion to domestic programs like WIC, Head Start, child care, housing, home energy, and homelessness aid, education and training, and much more. Medicare will be cut by $11.2 billion.  On February 8, the White House released a Fact Sheet with examples of the impact sequestration would have on families, jobs and the economy. If a sequester takes effect up to 373,000 seriously mentally ill adults and seriously emotionally disturbed children could go untreated, 70,000 young children would be kicked off Head Start, 10,000 teachers’ jobs would be put at risk, federally-assisted programs like Meals on Wheels would be able to serve 4 million fewer meals to seniors, and more than 100,000 formerly homeless people, including veterans, would be removed from their current housing and emergency shelter programs.

All agree that across-the-board cuts make no sense. Republicans tend to be more concerned about the cuts to the Pentagon, but refuse to include revenues in a package that replaces sequestration. The President and Senate leadership want new revenues from corporations and wealthy individuals to play a big part in replacing the mindless cuts.  House leadership has refused to agree to a replacement package that includes revenues and has expressed resignation that the cuts will go into effect.  Recently Senator McCain (R-AZ), who has been most vocal in expressing concerns about the Pentagon cuts, has indicated a willingness to consider a package that includes revenues. If other Republicans are open to including revenues the potential for a deal increases.

Congress is also facing a March 27 deadline when funding for appropriated programs will end because the temporary Continuing Resolution for FY 2013 expires.  Congress might either find enough savings to replace another month or two of sequestration or allow the across-the-board cuts to take effect for a short period until both sequestration and the rest of FY 2013 appropriations can be resolved at the same time.

The post CHN: March 1 Fiscal Showdown Looming appeared first on Coalition on Human Needs.

The Senate followed suit and passed H.R. 325 on January 31, also with a bipartisan vote of 64-34. The President signed the legislation on February 4.

Although the debt limit will be re-imposed on May 19, analysts believe that the ability of the Treasury Department to juggle payments will mean that the next crisis point will not be until sometime next summer.

To show Congress is still serious about putting the nation’s fiscal house in order, the bill also requires both the House and Senate to pass budget resolutions by April 15.  If the House or Senate fails to pass its own budget resolution, its members’ pay will be stopped.  The House leadership has enjoyed pointing out that the Senate has not passed a budget resolution since 2009.  This year, however, the new Senate Budget Committee Chair Patty Murray (D-WA) has announced the Committee will prepare a budget.

H.R. 325 does not require that the House and Senate agree on a final budget resolution.  Given the chasm separating the budget priorities of the two houses, no one expects a final budget resolution to be adopted.  That doesn’t matter much, because its main purpose is to set spending limits for appropriations, and Congress set those limits through FY 2021 when it passed the Budget Control Act of 2011.  However, budget resolutions can also force the Senate to employ a procedure known as reconciliation to enable it to pass deficit reduction measures with a simple majority vote and no filibuster.  Many analysts believe that a long-term deficit reduction plan will require such fast-tracking of Senate procedure, but it could be provided without a budget resolution, if Congress can agree to new legislation setting up a framework for a deficit reduction plan.  Getting to yes on such a plan will not be easy.

The partisan divide in Congress means there may be more attempts to govern by crisis – allowing across-the-board spending cuts to take effect on March 1, for example, or threatening to shut the government down by not extending appropriations when they expire on March 27.  But at least for the next 5 or 6 months, Congress has pulled back from threatening to force the government to default on its debt obligations.

The post CHN: Debt Ceiling Brinksmanship Loses its Appeal; Speaker Boehner Abandons the Boehner Rule appeared first on Coalition on Human Needs.

As the start of the new Congress approaches, Senate Democrats are considering changes to the Senate filibuster rule.

The filibuster is a controversial procedure where a minority of Senators extend debate indefinitely in order to prevent a vote on, and presumably defeat, a piece of legislation they oppose. While the filibuster often evokes images of Senators “talking a bill to death” on the Senate floor, current Senate rules allow Senators to block legislation without leaving their office.  In fact, current rules make it possible for Senators to anonymously filibuster.

Even if the required supermajority of 60 Senators vote to end debate, called “invoking cloture,” obstructionists can still force the Senate to wait an additional 30 working-hours before proceeding.

This obstruction has greatly reduced the Senate’s ability to pass legislation. According to the Brennan Center for Justice, “In the last three Congresses, the percentage of Senate floor activity devoted to cloture votes has been more than 50 percent greater than any other time since at least World War II.”  This worsened the logjam in which the Senate passed only 2.8% of its own bills, a 66% decrease since 2005. Judicial nominees are also caught up in the Senate stall – the vacancy rate for federal judges is 50%, creating 32 “judicial emergencies.” As many pundits have put it, “the Senate is the place where bills go to die.”

Typically, a 2/3 supermajority is required to change Senate rules. However, some Senate Democrats argue that the Constitution allows for a simple majority to amend the rules at the beginning of each session. Accordingly, Senate Majority Leader Harry Reid (D-NV) has proposed a series of amendments to the filibuster. One proposal would end the filibuster on the motion to proceed (in other words, no more endless debate about whether or not to start debating a piece of legislation). Leader Reid would also require filibustering Senators to actually get up and speak for the duration of the debate.

According to Fix the Senate Now, a coalition of organizations fighting to reform the filibuster, it is unlikely that any Republicans will back the proposed changes. The changes to the filibuster will likely have to come from within the Democratic Caucus, which will hold a 55-45 majority in the 113th Congress.

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