Members of Congress completed a one week “District Work Period” last week. The week out of session is a component of the new three weeks in Washington, one week at home schedule.

NEW SHORT-TERM FY 2011 BILL

Even with most of Washington focused on Japan and Libya, Congress did manage to keep the federal government in operation before they left DC on March 17. The Senate passed the bill by a vote of 87-13, while the House passed it 271-158. Although the House margin was comfortable, it is interesting to note that 85 Democrats voted in favor of the Continuing Resolution (CR) while 54 Republicans voted against the it – those Republicans voting against the CR did not believe the cuts to be substantial enough. President Obama signed the latest CR on March 18. This CR, which keeps the government open for three additional weeks until April 8, cut an additional $6 billion from the current budget. The budget cuts were taken mainly from unclaimed earmarks and $1.7 billion that was not used for the 2010 Census.

The House vote indicates looming difficulties that Speaker John Boehner (R-OH) faces in passing another funding bill, short- or long-term. The Speaker faces the choice between (A) deeper funding cuts to regain wayward Republicans, but in turn forcing a showdown with the Democratically-controlled Senate and White House, or (B) limiting the size of future cuts to obtain the necessary Democrats to pass a bill – a path that could lead to a challenge to his Speakership inside the House Republican caucus.

Further complicating matters is the likelihood that the federal debt ceiling may be reached as early as mid-April. Prior to then Congressional action to raise the debt limit is required to prevent default and its potentially-catastrophic economic consequences. In that the upcoming April 8 expiration of the current CR will, generally, coincide with the debt limit debate, it is likely that leading budget hawks to want to tie the two together.

SHUTDOWN OUTLOOK

Over the past week more and more indications point toward the heightened possibility of a government shutdown upon expiration of the current CR (April 8). The Office of Management and Budget (OMB) is currently reviewing the staffing plans of all federal agencies in order to determine who would be exempt from the shutdown – i.e., those federal employees deemed “essential” to keeping basic services functioning.

Insiders expect that, unlike previous shutdowns, some, as much as 40 percent of the federal workforce would be considered exempt from furloughs. This will mean that more government services than expected could continue uninterrupted or nearly-uninterrupted.

FY 2012 BUDGET

Meanwhile, work continues simultaneously in the House on its FY 2012 budget resolution draft – expected to be released in the coming weeks.

The House’s FY 2012 plan, which will provide a framework for both discretionary and mandatory spending over the next five years, is expected to rein in federal spending by addressing entitlement reform. Such reforms will almost certainly include Medicare and Medicaid and could also touch on future changes to Social Security. The overall plan and reforms to be implemented are currently being debated behind-the-scenes in meetings among small groups of House Republicans.

Front and center in the budget debate is how the OMB views the future versus the vision for the future by the Congressional Budget Office (CBO). CBO’s estimates are expected to be much more pessimistic, to the tune of $1.5 TRILLION over the next five years. Since Congress is required to use CBO estimates, it is far easier for the President’s budget to appear headed toward balance than it will be for the House Republican budget.

NEXT STEPS

FY 2011 budget negotiations will continue, as House and Senate Leaders – along with the White House – seek to reach an agreement that will fund the federal government through September 30 and attempt to avoid a government shutdown. While at home in their districts last week, Members of Congress heard from constituents with varied concerns – from those who support a shutdown as a way to force budget cuts and rein in federal spending, to those who are strongly opposed and are concerned over the continuity of the government benefits and services they receive, such as Social Security. We continue to monitor this process closely along with other news from Capitol Hill, and will provide you with updates as new developments occur.

OTHER ITEMS OF INTEREST

House Financial Services Committee Republicans introduced five bills to begin the process of dismantling components of the Dodd-Frank financial reforms signed into law last year. The proposed legislation would restructure the Consumer Financial Protection Bureau, delay implementation of debit card fees (swipe fees), modify registration requirements for private hedge fund advisers, exempting securities offering up to $50 million from certain SEC filings.

In addition, the House voted on a resolution to remove all troops from Afghanistan. It failed 93-321 with one Member, Rep. Justin Amash (R-MI), voting present.