BUDGET AND APPROPRIATIONS
Budget Blame Game Nearly Over Hill, Administration May Be Ready to Negotiate
With FY 2000 now a month old and five of 13 appropriations bills still not signed into law, Congress and the administration may finally be ready to begin serious budget negotiations. At press time, three of the five outstanding appropriations bills have been vetoed (Commerce-Justice-State, District of Columbia, and Foreign Operations), and two more are awaiting a veto (Labor-HHS-Education and Interior). On October 29, President Clinton signed a third continuing resolution to keep those portions of the federal government not yet funded open through November 5.
The GOP leadership has refused to enter into serious negotiations with the president over the remaining appropriations bills until Congress passed all 13 individually and forced him to sign or veto them one by one. Congressional Republicans claim that the 13 bills, as passed, do not dip into the Social Security surplus, citing an October 28 Congressional Budget Office (CBO) letter as evidence. With the president asking for more money, they now feel well positioned to blame him for any final spending package that does dip into surplus Social Security funds.
The president and congressional Democrats dispute the GOP claim, arguing that the Republican bills actually tap $17.1 billion in surplus Social Security money. They cite their own CBO letter, also released on October 28, backing their position. They discount the CBO estimate cited by Republicans because it selectively uses spending estimates by the Office of Management and Budget (OMB), rather than CBO's own estimates, when the OMB estimates are lower -- a budget gimmick known as "directed scoring."
The president provided further cover for Democrats when he submitted a new Social Security lockbox plan to Congress on October 26, which purported to protect the Social Security surplus (see separate story). The proposal was quickly discounted by Republicans in Congress, but it may have served the president's purposes, politically.
Posturing and politics aside, congressional Republicans finally appear ready to enter into serious negotiations with the administration over the remaining bills. One major point of contention, a 0.97 percent across-the-board spending cut applicable to all federal discretionary spending, included in the Labor-HHS-Education spending bill, is likely to be set aside quickly. Opposed even by some Republicans, it was only included in the bill to let Republicans claim that their bills had not dipped into the Social Security surplus.
Once that issue is put aside, the real negotiating will revolve around how much extra spending the administration can get for its key priorities. Those priorities appear to be putting another 50,000 police officers on the street, making further progress on its plan to hire 100,000 new teachers, and adequately funding environmental programs. Significant additional spending for human needs programs benefiting low-income communities does not appear to be high on the list. If this is the case, spending for such programs in the Labor-HHS-Education bill, the primary bill affecting these programs that is still unsigned, is not likely change much from levels already provided by Congress.
Labor-HHS-Education Appropriations
House and Senate negotiators ironed out their differences in conference on the Labor-HHS-Education bill (H.R. 3036), and a compromise package was quickly passed in the House on October 28 by a vote of 218-211. The Senate is expected to pass the bill on Tuesday, November 2. The president has indicated that he will veto the bill.
The bill contains a number of items of concern to human needs advocates:
*Roughly 1% Across-the-Board Spending Cut: As mentioned earlier, the bill includes a 0.97 percent across-the-board spending cut affecting all discretionary programs, not just those in the Labor-HHS-Education bill. This cut would, if enacted, affect housing and nutrition programs funded by the already enacted FY 2000 VA-HUD and Agriculture appropriations bills. The cut would provide $3.45 billion in outlay savings. The cut is not included in the following numbers, which are based on House Appropriations Committee estimates.
*Social Services Block Grant (SSBG): The bill funds SSBG at $1.7 billion, significantly less than the $2.38 billion provided by the Senate and requested by the president. According to House Appropriations Committee Democrats, the conference report also delays the obligation of $425 million out of the $1.7 billion until the last day of FY 2000, and reduces the transfer authority from TANF to SSBG from 10% to 4.25%.
*Child Care and Community Block Grant: The bill funds this program at $1.182 billion, significantly less than the $2 billion provided by the Senate. Because of underfunding, the CCDBG only serves one in ten eligible children.
*21st Century Learning Centers: The bill funds this program at $300 million, a cut of $300 million below the president's request. This program provides funding to help schools stay open longer, provide recreational and learning-based activities, and generally provide a safe place for children after school. Funds are distributed in the form of grants to inner city and rural public schools. According to House Appropriations Committee Democrats, the cut will fund 3,400 fewer centers and serve 950,000 fewer children than requested.
*Head Start: The bill includes the full $5.27 billion requested by the president, but delays $1.4 billion of this funding until October 1, 2000, the start of FY 2001.
*National Family Caregiver Support Program: The bill provides no funding for this $125 million Clinton administration initiative to help 250,000 families who are caring for older relatives. Authorization for the program is included in legislation now before Congress reauthorizing the Older Americans Act.
*Right Track Partnerships: The bill fails to fund this $75 million competitive grant program. According to the administration, this will prevent 75,000 disadvantaged youth from participating in this Employment and Training Administration program.
*Work Incentives Grants: The bill fails to fund the administration's $50 million request for this program to help people with disabilities find and keep jobs. According to a 1998 Harris survey, 72 percent of Americans with disabilities want to work, but nearly 75 percent are unemployed.
*EITC: The bill does not include a $8.7 billion deferral of EITC payment that was included in the House bill by Rep. Tom DeLay (R-TX).
Clinton Tax Package Vote
In an effort to put further pressure on President Clinton, House Republicans brought a package of tax increases he has backed to the floor for a vote on October 19. The package was defeated by a vote of 419-0, with five Democrats abstaining. The $19.2 billion package included a 55 cents per pack cigarette tax increase that would have raised an estimated $7.8 billion annually.
By demonstrating insufficient political support for the president's tax plan, House Republicans hoped to show that the only way the president could get the increased spending he wants is to dip into the Social Security surplus. House Democrats discounted that argument, saying the vote was not a true test of its support. They argued that it was unfair to bring the tax package to the floor without the accompanying education, health, and other initiatives the president wanted to fund with the money it would raise.
Tax Extenders
The Senate Finance Committee adopted an 18 month package of tax extenders on October 20. The package was approved by voice vote. The $8 billion package includes an extension of a business research and development tax credit that expired on June 30. It also includes an 18 month extension of existing welfare-to-work and work opportunity credits, and makes taxpayers subject to the alternative minimum tax (AMT) fully eligible for the $500 per child tax credit. The bill also includes a deduction for employer-provided educational benefits.
Overall, the bill is significantly scaled back from a $75.5 billion, ten year plan that Finance Committee Chairman William Roth (R-DE) unveiled on October 6 to mixed reviews. The committee-passed bill may come to the Senate floor the week of November 1 under a unanimous consent agreement.
The House Ways and Means Committee passed a $23 billion, five year package (H.R. 2923) on September 23. The president has threatened to veto any bill that reaches his desk that is not fully paid for with offsetting revenue raisers.
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SOCIAL SECURITY LOCKBOX
President Submits Social Security Lockbox Plan to Congress GOP Declares Plan Dead On Arrival
In a move seemingly designed to provide Democrats political cover from Republicans charging them with wanting to dip into the Social Security surplus, President Clinton submitted a Social Security lockbox plan to Congress on October 26. Congressional Republicans immediately declared the proposal dead on arrival.
The president's plan would dedicate all Social Security surpluses to debt reduction, completely retiring the $3.1 trillion publicly-held portion of the federal debt by 2015. Starting in 2011, and continuing through 2016, the plan would also transfer general revenue funds from the Treasury to the Social Security trust fund in an amount equal to the interest savings accrued from paying down the debt. The transfer would then continue at 2016 levels through the year 2044. This transfer would, the administration says, extend the life of the Social Security trust fund from the year 2034, when it is now expected to become insolvent, to the year 2050.
To facilitate the protection of Social Security surpluses, the proposal would extend thorough FY 2014 existing caps on discretionary spending. It would similarly extend PAYGO rules restricting tax cuts and entitlement spending increases. Those caps and rules are currently set to expire after FY 2002. The plan would also reserve one-third of any on-budget (i.e., non-Social Security) surpluses for the Medicare program.
Republican congressional leaders attacked the proposal for transferring general revenues into Social Security and failing to fundamentally reform the program, presumably by cutting benefits, raising revenues, or privatization. In a statement released by the administration, the president countered that GOP-backed lockbox plans would not add a day of solvency to the Social Security trust fund. Moreover, the administration claimed, according to their own Congressional Budget Office's estimates, congressional Republicans have already failed to live up to their pledge not to dip into Social Security surpluses in passing their FY 2000 appropriations bills.
On May 26, the House passed Social Security lock box legislation (H.R. 1259), but it stalled in the Senate. Senate Republicans have insisted on passing a stronger version that would automatically reduce the national debt ceiling, an approach strongly opposed by the administration because it could lead to a default on federal debt payments. Senate Republicans have also refused to allow Democrats to attach amendments that would apply the concept to Medicare. The result was a filibuster by Senate Democrats, which has kept the bill tied up for months.
The broader issue of Social Security reform has seemed dead for some time, at least for this year. Prospects for obtaining bipartisan agreement seem even more remote next year -- an election year. The timing of the president's proposal, its content, and the predictability of the harsh Republican response all seem to indicate that its true purpose was providing added political cover for Democrats during the year's budgetary endgame, where both parties have accused the other of raiding the Social Security program.
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