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Budget Conference outlook

A critical piece of last week’s agreement to reopen the federal government and avoid defaulting on our debts was the commitment by both parties in Congress to pursue a larger deficit reduction plan by December 13.

The Congressional Budget Act of 1974 requires the House and Senate to adopt an annual budget resolution that is a blueprint around which Congress sets its spending and revenue policies for the subsequent year. Though the budget resolution itself does not carry the force of law, it sets in place parliamentary procedures to expedite the adoption of laws that fulfill the budget’s goals. To achieve this, however, both chambers must go to a “conference committee” to resolve their differences. Then both chambers must adopt the same version of the budget by majority vote. As one would expect, this task can be difficult with a Republican-controlled House and a Democratic-controlled Senate.

In March, both chambers passed their respective versions of the budget resolution. The conference committee formed to resolve those differences has now been anointed the venue to adopt a deficit reduction plan and it must conclude by December 13. But the two plans differ greatly in spending levels and revenue estimates. Beyond numbers alone, there is far greater conflict about the proposed policy changes that allow accountants to arrive at those bottom-line figures. The House Republican plan includes substantial changes to Medicare and food stamps, among others. The Senate Democratic plan proposes new taxes.

Many Americans will ask, what will occur if the Budget Conference does not meet its goal of resolving their differences by December 13? There is no enforcement mechanism that kicks in should the conference fail. And practically speaking, the federal government will continue to enact spending bills and revenue bills without annual blueprints. If, however, they do succeed, one must remember Congress still must enact laws that actually execute the Budget Resolution, which is a tall order.

Budget Conference to begin meeting

The new Budget Conference is expected to meet for the first time on October 30.

Members and staff from both the House and Senate Budget Committees have been in contact with each other and House Budget Chair Paul Ryan (R-WI) and Senate Budget Chair Patty Murray (D-WA) held a breakfast meeting the day after a deal was made that created the Budget Conference.

The Budget Chairs - Ryan and Murray - along with Senate Budget Committee ranking member Jeff Sessions (R-AL) and House Budget Committee ranking member Chris Van Hollen (D-MD) held an organizing conference call on Wednesday.

While any discussions are positive, the fact remains that the two sides start very far apart. The Democratic-controlled Senate and the Republican-controlled House are $91 billion apart on their top-line spending number. Not to mention the Senate budget contains nearly $1 trillion in new taxes and spending while the House budget would balance in 10 years by cutting $5.7 trillion in spending.

Democrats to push for new tax increases

Democrats in both chambers, emboldened by the experience of the fight over the government shutdown and debt ceiling increase, are going to push $50 billion worth of tax increases to eliminate the sequester’s automatic spending cuts. The next phase of these cuts will take effect January 15 when government funding will drop from $986 billion to $967 billion.

While Democrats stood united during the government shutdown and debt ceiling debate, they are more divided on the issue of taxes. Four Democrats, including three facing tough reelection fights next year (Hagan-NC, Begich-AK and Pryor-AR), voted against the Senate Democratic budget plan that will guide Budget Chair Patty Murray’s efforts in the Budget Conference with the House.

Full list of Budget Conference members

House Republicans: Rep. Paul Ryan (WI), Rep. Tom Cole (OK), Rep. Tom Price (GA), Rep. Diane Black (TN)
House Democrats: Rep. James Clyburn (SC), Rep. Chris Van Hollen (MD), Rep. Nita Lowey (NY)

Senate Republicans: Sen. Jeff Sessions (AL), Sen. Charles Grassley (IA), Sen. Mike Enzi (WY), Sen. Mike Crapo (ID), Sen. Lindsey Graham (SC), Sen. Rob Portman (OH), Sen. Pat Toomey (PA), Sen. Ron Johnson (WI), Sen. Kelly Ayotte (NH), Sen. Roger Wicker (MS) 

From Senate Democratic Caucus: Sen. Patty Murray (WA), Sen. Ron Wyden (OR), Sen. Bill Nelson (FL), Sen. Debbie Stabenow (MI), Sen. Bernie Sanders (VT), Sen. Sheldon Whitehouse (RI), Sen. Mark Warner (VA), Sen. Jeff Merkley (OR), Sen. Chris Coons (DE), Sen. Tammy Baldwin (WI), Sen. Tim Kaine (VA), Sen. Angus King (ME)

Obamacare rollout plagued by technical Issues

The rollout of President Obama's signature healthcare law has been plagued by high profile technical issues - particularly relating to the federal website set up to begin enrolling uninsured Americans.

While the White House has played public relations defense over the last two weeks on the issue, hoping to avoid the public losing complete confidence in the new law, it is also taking substantive steps to fix the technical problems.

This week, as a part of this effort, the Administration's Chief Technology Officer, Todd Park, announced a "tech surge" and the White House tapped President Obama adviser Jeffrey Zients to help fix the many publicized technical challenges facing the rollout.

As the White House moves to stop the bleeding, House Republicans began hearings this week seeking to exploit the disastrous rollout to pressure the Administration and Senate Democrats into accepting changes to the law - most significantly, a waiver of the individual mandate for next year.

Jeh Johnson nominated to head Homeland Security

This week, President Obama nominated former Pentagon General Counsel Jeh Johnson to be the next Secretary of Homeland Security. Johnson, a New York lawyer and Obama 2008 campaign foreign policy adviser, is expected to be confirmed without significant opposition from Senate Republicans. 

Political bits:

House

Arkansas 2nd Congressional District Special: Rep. Tim Griffin (R-AR) announced this week that he would not seek a third term in Congress in 2014. Griffin's retirement could give Democrats an unexpected pickup opportunity in this competitive district.

Florida 13th Congressional District: Former House Appropriations Chairman Bill Young (R-FL) passed away on October 18.

Senate

Kentucky: Businessman Matt Bevin earned the backing of the Senate Conservatives Fund in his primary bid against Minority Leader Mitch McConnell (R-KY).

Mississippi: Mississippi State Sen. Chris McDaniel, a Republican, announced his primary challenge to Sen. Thad Cochran (R-MS). McDaniel already has support from the Club for Growth and Senate Conservatives Fund.

A look ahead:

House

Tuesday, October 29 -- The House Armed Services Committee will hold a hearing on Twenty-five years of Acquisition Reform: Where do we go from here? at 10:00 a.m. in 2118 Rayburn.

Tuesday, October 29 -- The House Financial Services Committee will hold a hearing on Federal Housing Administration: Implications of a $1.7 billion Taxpayer Bailout at 10:00 a.m. in 2128 Rayburn.

Tuesday, October 29 -- The House Natural Resources Committee’s Public Lands and Environmental Subcommittee will hold a hearing on Threats, Intimidation, and Bullying by Federal Land Management Agencies at 10:00 a.m. in 1324 Longworth.

Tuesday, October 29 -- The House Foreign Affairs Committee will hold a hearing on Next Steps on Egypt Policy at 10:00 a.m. in 2172 Rayburn.

Tuesday, October 29 -- The House Ways and Means Committee will hold a hearing on Affordable Care Act Implementation at 10:00 a.m. in 1100 Longworth.

Tuesday, October 29 -- House (Select) Intelligence Committee will hold a hearing on NSA Programs at 1:30 p.m. in 2167 Rayburn.

Senate

Tuesday, October 29 -- The Senate Banking, Housing and Urban Affairs Committee will hold a hearing on Housing Finance Reform: Essentials of a Functioning Housing Finance System for Consumers at 10:00 a.m. in 538 Dirksen.

Tuesday, October 29 -- The Senate (Special Committee on Aging) will hold a Roundtable - Tackling Diseases on Aging: Why Research Collaboration Matters at 4:00 p.m. in 526 Dirksen. 
                 

Washington by the numbers

54 - The percentage of Americans who think health care exchanges are operating smoothly or are not aware of their performance.
71 - The percentage of Americans who lack familiarity with the health care exchanges.               

They said what?

"We're all really rootin' haaahd to bring the World Series Cup back to Boston.”  – Boston Mayor Tom Menino, in his latest sports flub.

Washington humor

"The popularity of Congress is at an all-time low, according to a recent poll that says Americans like head lice more than they like Congress. But you know, I think the real story here is that some Americans like head lice." – Conan O'Brien

 

 

 Steven C. LaTourette, President | 202.559.2600

McDonald Hopkins Government Strategies LLC
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www.mcdonaldhopkinsgs.com

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