This week congressional members return to Washington, DC for what will likely be a tumultuous Fall as Congress continues to grapple with uncompleted issues like immigration reform, farm bill, nutrition entitlements and all 12 of the annual appropriations bills that fund the federal government. On top of these issues add the Syrian conflict, raising the U.S. borrowing authority on the massive $16.7 trillion debt and comprehensive tax reforms.
With such complex issues and given the dysfunction of Congress it remains to be seen what, if anything Congress will accomplish in the remaining 39 legislative days before the end of the year and the 1st session of this 113th Congress. Moreover, the 2nd session of the congressional calendar doesn’t look promising either. 2014 is a political election year and while the House is highly likely to remain in republican control (yes, that depends on how you define “control”), the voters in three states, Montana, South Dakota and West Virginia will determine which party will control the U.S. Senate.
On Friday, September 6, U.S. House Majority Leader Eric Cantor (R-VA) sent a memo to House Republicans outlining an agenda packed with significant legislative initiatives. Some of those include:
FY 2014 Appropriations
Both House and Senate congressional leaders are already pointing to the need to extend funding of all federal agencies at current levels until mid-December. But in the House, leaders are working on strategies that include caveats.
Rank-in-file Republican members of the House have been expressing their ire at temporary (spending) continuing resolutions (CR). For their support of another CR members are encouraging House leaders to include a roll-back of the Affordable Care Act, President Obama’s biggest legislative achievement. However, in Cantor’s memo he attempts to persuade Republican members to support a CR at the (FY 2013, P.L. 113-6) sequester level of $988 billion and provide “…$64 billion in less spending compared to the current funding levels President Obama signed into law a mere five months ago.” Cantor goes on to say, “In signing a CR at sequester levels, the President would be endorsing a level of spending that wipes away all the increases he and Congressional Democrats made while they were in charge and returns us to a pre-2008 level of discretionary spending.”
The recent history of this debate dates back to the enactment of the Budget Control Act (BCA) of 2011, (P.L. 112-25). Under the BCA the FY 2014 discretionary spending cap is $967 billion. The White House Office of Management & Budget has until January 2014 to implement the sequester level of spending. Democrats in both legislative chambers are arguing to return to a spending cap of $1.058 trillion which is the original limit prior to the sequester. The White House has issued a blanket veto threat of the House versions of FY 2014 appropriations bills.
Cantor may have a difficult time persuading his caucus. Recall that prior to the House adjourning for the August recess a watershed moment occurred in the U.S. House when Republican leaders had to pull (H.R. 2610) the FY 2014 Transportation, Housing and Urban Development (THUD) appropriations bills from the floor for lack of Republican support to pass the measure. The THUD bill adhered to limits enacted by the BCA. The lack of Republican support to pass the T-HUD bill is viewed by political pundits as a sign that the cuts approved by the House Appropriations Committee, in-line with the BCA, are too steep even for Republicans who claim to want to reduce the deficit through spending cuts alone.
After Republican leaders pulled the bill House Appropriations Committee Chairman Hal Rogers (R-KY) issued a statement claiming he was “deeply disappointed with the decision to pull the bill. (This action means) the House has declined to proceed on implementation of the very budget it adopted just three months ago.”
Increasing U.S. Borrowing Authority
On August 26, the White House released a statement that the U.S. is set to run out of borrowing authority in mid-October. At this time estimated cash on hand will be $50 billion. According to Treasury Secretary Jack Lew this will not be enough to cover U.S. financial obligations for long and could shock investors holding trillions in U.S. bonds from lending money to the U.S.
The current U.S. borrowing limit is $16.7 trillion. The interest rate paid to finance the budget deficit is currently 2.5%. The payment on interest alone is $417.5 billion annually. As a comparison, the President’s fiscal year 2014 budget request for the Department of Defense is $526.6 billion.
The lines have already been drawn in this debate. U.S. House Speaker John Boehner (R-OH) has said, “We’re not going to raise the debt ceiling without real cuts in spending.” Senate Majority Leader Harry Reid (D-NV) has said Democrats are “not negotiating on the debt ceiling.” White House press secretary Jay Carney has said “We will not negotiate over Congress’s responsibility to pay the bills that Congress ran up.”
In his memo to House Republicans on Friday, Minority Leader Cantor reiterated,”Over the past three decades during times of divided government, increases in the debt limit have been accompanied by major spending, fiscal, and regulatory reforms and I expect that model to play out once again. Gramm-Rudman, the Congressional Review Act, and the Budget Control Act all were enacted on previous increases of the debt limit. Therefore, House Republicans will demand fiscal reforms and pro-growth policies which put us on a path to balance in ten years in exchange for another increase in the debt limit.”
Cansler Consulting met with staff leaders of the U.S. House Ways and Means and Senate Finance Committees in late May and at that time they espoused that the window of opportunity for the Committees to begin mark-up of a major overhaul to the U.S. tax code is between July 5 and Thanksgiving. “If mark-up is not completed by then it will not happen in this session.”
31 legislative days remain until Thanksgiving. The window of opportunity is closing fast!
Up for consideration is about $1 trillion in annual tax breaks for individuals, along with billions of dollars in corporate tax benefits. Members of Congress will have to be formally prepared to defend benefits and tax credits they believe should remain in the code.
The two Chairmen of the tax writing Committees in the House and Senate namely, House Ways and Means Committee Chairman Dave Camp (R-MI) and Senate Finance Committee Chairman Max Baucus (D-MT) have been working together for months studying the tax code and making joint appearances across the country to listen to American’s concerns and create support for an overhaul to the tax code. Chairman Baucus is not seeking re-election in 2014 and will retire January 2015. Chairman Camp is term limited as Ways and Means Committee Chairman under the six-term rule established by the Republican caucus. Both desire to have a major impact on the debate as a final gesture before leaving their posts.
For the two Chairmen to make any progress they must find a way to make tax reforms a part of the larger budget discussions. But as the federal budget constricts that could mean making the hard choices of putting additional revenue on the table or cutting popular exemptions, or both. In their latest findings reported in May of this year, the Congressional Budget Office (CBO) projected federal tax receipts would climb from $2.45 trillion in 2012 to $2.81 trillion in 2013, and to $3.78 trillion by 2017.
In his memo, House Majority Leader Cantor (R-VA) indicated, “Throughout the fall, House Republicans will continue to bring environmentally friendly energy legislation like this to the floor to bring down the cost of energy, create jobs for the middle class, and make the United States more energy independent.”
Up for consideration will be the Protecting States’ Rights to Promote American Energy Security Act (H.R. 2728). Cantor said, “We must focus on expanding our energy production in an environmentally friendly way to lower the price of energy for all Americans.” HR 2728 would prohibit the Interior Department from enforcing federal hydraulic fracturing regulations in any state that already has existing regulations and recognizes states’ rights to regulate this type of activity.
IF this issue is completed this year it will be toward the end of the year.
Recall the U.S. Senate has adopted (68-32) S. 744, the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013. The legislation includes provisions giving undocumented farmworkers a faster route to legalized status and establishes a new visa programs to provide a future streamlined process for migrant employees. The legislation replaces the existing H-2A visa program for seasonal workers and is administered by the Department of Labor with a broader program administered by USDA. S. 744 would create a W-3 visa for contract agricultural workers and a W-4 visa for at-will agricultural workers. To import a W-3 or W-4 worker, an employer would submit a petition to DHS containing specified attestations, including attestations about contracts, U.S. worker recruitment, and compliance with other employer requirements. W-3 and W-4 visas would be capped initially at 112,333 total visas per year, with provisions for USDA, in consultation with DOL, to adjust these caps and to set visa limits for later years.
Leadership in the U.S. House of Representatives have said the Senate legislation is dead on arrival.
In the House, the Judiciary Committee continues marking up legislation in a piecemeal approach to overhaul the U.S. immigration policy. Work continues on drafting immigration bills that include issues such as granting legal status to those people who are brought into the U.S. illegally and creating a low-skill guest worker program. Speaker of the House John Boehner (R-OH) has indicated he will invoke the “Hastert rule,” which means he will not allow a vote on any immigration legislation or a conference report unless a majority of Republicans support it.
As it relates to consideration of immigration reform measures, the legislation most likely to reach the House floor first will be the border security legislation, H.R. 1417. Among more detailed criteria, this legislation significantly tightens operational control related to border crossing. It establishes operational control “as a condition in which there is a not lower than 90% illegal border crossing effectiveness rate.”
State and local immigration enforcement (HR 2278),
Employment Verification (HR 1772), directs the Secretary of Homeland Security (DHS) to establish an employment eligibility verification system (EEVS), patterned after the E-Verify system. This would eliminate the current paper-based I-9 system. It requires an employer to attest, during the verification period that the employer has verified that an individual is not an unauthorized alien by: (1) obtaining and recording the individual’s social security account number, and (2) examining specified documents that establish such individual’s identity and employment authorization. Individuals are required to attest that he or she is a U.S. citizen or national, a lawful permanent resident, or an alien authorized to work in the United States. The legislation also establishes a phased-in EEVS participation deadline (six months to two years) for different categories of employers, including agricultural employers.
Agricultural Guest Workers (HR 1773), establishes an H-2C non-immigrant visa for an alien having a residence in a foreign country which he or she has no intention of abandoning and who is coming temporarily to the United States to perform agricultural labor or services. It requires an employer to file an H-2C petition with the Department of Agriculture (USDA) which shall include specified employment-related attestations. Provisions of the legislation describe: (1) penalties; (2) working conditions, wages, and transportation reimbursement; (3) admissions and extensions of stay; (4) abandonment of employment and worker replacement; (5) protection of U.S. workers; (6) legal assistance; (7) fees; and (8) arbitration and mediation. The Secretary of Agriculture is required to conduct investigations and random audits of employer work sites. Employers must guarantee to offer the worker employment for the hourly equivalent of at least 50% of the work hours during the total anticipated period of employment. Any alien who is unlawfully present in the U.S. by a certain date can become eligible for H-2C status. A trust fund is established in the U.S. Treasury to provide a monetary incentive for H-2C workers to return to their country of origin upon expiration of their visas. Allows any H-2C worker to perform agricultural labor or services for any “registered agricultural employer” if the worker: (1) is already lawfully present in the United States as an H-2C worker; and (2) has completed the period of employment specified in the job offer the worker accepted, or the employer has terminated the worker’s employment. H-2C program would have a numerical cap of 500,000, subject to adjustment by USDA.
High-tech Worker Visas (HR 2131). Among other provisions it establishes worldwide employment-based immigration levels at: (1) 140,000 through FY2013, and (2) 235,000 beginning in FY 2014 reduced by the number of returned visas resulting from the elimination of the diversity immigrant program. Makes available up to 55,000 (EB-6) visas, reduced by the number of returned visas resulting from the elimination of the diversity immigrant lottery, available in FY2014 and subsequent fiscal years to qualified immigrants who: (1) have a doctorate degree in a field of science, technology, engineering, or mathematics (STEM degree) from a U.S. doctoral institution of higher education, or have completed a dental, medical, or veterinary residency program, have received a medical degree, a dentistry degree, a veterinary degree, or an osteopathic medicine/osteopathy degree; and (2) have taken all required courses, including courses taken by correspondence or by distance education, while physically present in the United States. Unused EB-1 (priority worker) and EB-6 visas will be available to (EB-7 visa) aliens who: (1) hold a master’s degree in a STEM field from a U.S. doctoral institution of higher education that was either part of a master’s program that required at least two years of enrollment or part of a five-year combined baccalaureate-master’s degree program in such field; (2) have taken all master’s degree courses in a STEM field, including all courses taken by correspondence or by distance education, while physically present in the United States; and (3) hold a baccalaureate degree in a STEM field.
Farm Bill and Nutrition
Recall on June 20 the full House voted down the farm bill (H.R. 1947) 195-234 that included $20 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP) over ten years. One of the main reasons for the failure of H.R. 1947 was due to a controversial amendment offered by Rep. Steve Southerland (R-FL) being adopted on the House floor. The amendment would allow states to require adults who receive or apply for SNAP benefits, including parents with children as young as 1 year old, to work or participate in a work or training program for at least 20 hours a week. If beneficiaries did not participate SNAP benefits would be withdrawn. States would be extended financial incentives allowing them to keep half of any savings achieved and use those funds for whatever purposes they choose. It would also end waivers that allow states to exempt single able-bodied adults without children from time limits for food aid. After the defeat of H.r. 1947, Republican leaders stripped SNAP provisions from the farm bill and on July 11 brought it back to the House floor (H.R. 2642) where it passed 216-208.
When the Senate received the House-adopted version of the farm bill on July 18, Senate leaders stripped the language in its entirety and replaced it with the June 10 Senate-adopted (66-27) version of the farm bill, S. 954. The Senate-adopted version of the farm bill maintains the SNAP provisions and only cuts the program by $4 billion.
On the evening before Congress embarked on its August recess, US Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) commented, “This (farm bill) is a ticking time bomb here waiting to go off, and it makes no sense.” Her remarks were targeted toward the House of Representatives and their inability to reach consensus on a Nutrition Title.
Since that time a group of Republican House members have been working on stand-alone nutrition legislation, the Nutrition Reform and Work Opportunity Act, that will cut SNAP by $40 billion over ten years. Majority Leader Cantor said in his memo that sometime “over the next two months,” the House will consider nutrition legislation. Cantor reaffirmed that the revised nutrition bill would retain the controversial provisions and incentives by Rep. Steve Southerland (R-FL).
Simply put, there remains no firm plan for how the US House will proceed on the farm bill and nutrition policy. The farm bill is currently under a one year extension that expires September 30. If the House does not adopt nutrition legislation and appoint conferees to a formal Conference Committee to work out differences between the House and Senate-adopted versions of the farm bill by September 13, there will need to be another extension of the farm bill. Without another extension or enacted new law US farm policy reverts back to the base legislation, the Agricultural Act of 1949 (Pub.L. 81-439).
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