• House and Senate Pass Legislation To Fund Federal Government
  • September 26, 2012 | Author: B. Jeffrey Brooks
  • Law Firm: Adams and Reese LLP - Washington Office
  • Early Saturday morning the Senate passed, in a 62-30 vote, the six-month continuing resolution (CR) which the House had passed, in a 329-91 vote, the previous week. The legislation (H J Res 117) will fund the federal government until March 27 of next year. President Obama has received the legislation and he is expected to sign it in the coming days. Following passage, both chambers adjourned so they could return home to the campaign trail. Neither chamber is expected to return until after the November elections.
     
    The CR increases spending levels by .6 percent, or $8 billion above current levels, for most federal programs and agencies.  However, most agencies will have to operate under appropriations laws decided in 2011 and will be unable to make major changes in their budgets or operations. The legislation incorporates the $1.047 trillion discretionary spending level set in last year’s debt limit law (PL 112-25) rather than the lower $1.028 trillion that some House Republicans had called for. Various exceptions were included in the CR to address pressing concerns regarding matters such as defense policies and reauthorization of the Temporary Assistance for Needy Families (TANF) program. Whether Congress will simply put another six-month CR in place, in March, to complete fiscal year 2013 appropriations and instead concentrate on fiscal year 2014 measures remains to be seen.
     
    One growing concern with the CR is that it would strip out the inflation bumps for 2013 and 2014 that were included in the overwhelmingly passed surface transportation bill (MAP - 21) from June. If that inflation increase were to be left out for the entire 2013 fiscal year, it would leave states' federal road and transit allocations short of the MAP-21 levels by at least $620 million. One way to restore the funds would be for an omnibus spending bill or a stand-alone Transportation-HUD appropriations bill to be enacted. The likelihood of such a scenario is unclear.
     
    Since the CR is devoid of any reauthorization for the nation’s farm and food aid policy it seems that the current legislation (PL 110-246) will expire at the end of this month. Congressional leaders appear to have opted to delay any fight over farm policy until after the elections. This would mark the second time, in the last ten years, that a farm bill will expire. The last time was in 2007, when the 2002 law (PL 107-171) was allowed to expire for three months. A few major activities authorized in the farm bill, such as the Supplemental Nutrition Assistance Program (SNAP), would continue since it has been included in the CR. The Senate passed a five-year farm bill (S 3240) in June that would save $23 billion over 10 years, while the House Agriculture Committee approved a five-year bill (HR 6083) in July that would save $35 billion over 10 years. However, the two chambers have failed to find a compromise to prevent the expiration.
     
    House Republicans, in a 223-196 vote, also pushed through a bill (HR 6365) which would require the president to submit to Congress, by October 15, a plan to replace all discretionary cuts as well as mandatory defense cuts with other spending reductions. The measure would not allow the plan to include revenue increases.
     
    A day after the CR vote in the House, the White House released a congressionally mandated report on how the sequester would affect specific agencies. The sequester, which was mandated last year under the debt ceiling deal, will cause automatic across-the-board spending cuts beginning in January 2013.  The cuts were put into motion after a joint congressional committee failed to propose and enact a plan to reduce the deficit by $1.2 trillion. The report outlines some $109 billion in reductions while urging Congress to find a way to stave off the automatic reductions. If the cuts go into effect around $54.67 billion will be trimmed from defense, $38 billion (8.2%) from domestic discretionary accounts, and $11 (2%) billion from Medicare. Under the sequester the Federal Emergency Management Agency would take a $580 million reduction and the National Institute of Health would be cut by $2.5 billion. The sequester is also expected to cut more than $471 million in the coming year from the Highway Trust Fund’s state formula allocations as well as shrink the Department of Transportation’s TIGER grant funding by $41 million.
     
    The Federal Reserve’s recent announcement that it would pursue new measures to boost the economy is drawing intense criticism from the GOP, but high praise from Democrats. The plan includes a new round of big purchases of mortgage-backed bonds that would total almost $40 billion per month. Wasting no time, the Fed began purchasing last Friday. Purchases are expected to total about $23 billion over the remainder of September. The Fed also promised to keep interest rates at essentially zero until mid-2015 and signaled a willingness to do even more if needed. 
     
    As always, we will continue to monitor this and update you accordingly. Please do not hesitate to contact us if we can be of additional assistance.