While the House was out of session last week and much of the focus in Washington has been on the situation unfolding in Egypt, action in the Senate highlighted the new bipartisan truce that was recently reached between leaders in both parties in an attempt to alleviate the partisan gridlock that stalled activity in the upper chamber last year.
Under the deal reached in late January by Majority Leader Harry Reid (D-NV) and Republican Leader Mitch McConnell (R-KY), Republicans vowed not to block motions to bring up legislation on the Senate floor in return for a Democratic promise to allow Republicans to offer more amendments when bills come to the floor.
This “gentlemen’s agreement” was on display on February 2, as the Senate considered a delayed Federal Aviation Administration bill and Republicans were able to offer an unrelated amendment that sought to repeal the new healthcare reform laws (Public Laws 111-148 and 111-152). The amendment was defeated along party lines, but the process showed the potential workability of the new Senate truce.
DEBT CEILING AND BUDGET UPDATE
Two weeks ago, Republican Leaders in the House appeared poised to link the upcoming debt ceiling increase vote to cuts in federal spending. Since that time Fed Chairman Bernanke has voiced opposition to this strategy. While exact details and strategy have yet to be determined, House Leaders have openly discussed their desire to consider the debt ceiling vote – likely to occur this spring – in conjunction with their party’s spending reduction goals. Such negotiations are likely to continue in the near future between the House, Senate Democrats and the White House.
Meanwhile, House Leaders took a substantive step toward spending reductions on January 25, bringing to the floor H.Res. 38. The resolution requires new House Budget Committee Chairman Paul Ryan (R-WI) to assume “non-security” discretionary spending levels will be at levels at or below Fiscal Year (FY) 2008 levels when the House moves forward on legislation to fund the government through the end of current FY 2011. This is an unprecedented move that has dramatically enhanced the Budget Chairman’s powers given the fact that for decades, budget numbers could only be set by a joint resolution that needed approval by both the House and Senate.
The resolution – which was adopted by a vote of 256-165 with support from 17 Democrats – came just hours before the President’s State of the Union address (see below for more on the State of the Union). Although the resolution did not contain specific reductions, House Leaders have since decided on a $32 billion reduction below a straight continuation of FY 2010 levels.
The current Continuing Resolution (CR) is set to expire March 4, and legislation to continue funding the federal government through the end of FY 2011 (September 30) is expected on the House floor the week of February 14 – the same week President Obama is due to unveil his proposed Budget for FY 2012.
House Leaders have indicated that the next CR will be brought to the floor under an open process, likely allowing for amendments to be offered by both parties on various budgetary priorities. These could include limitations to FY 2008 levels for non-security related activities of the federal government or limitations on implementation of the new healthcare law. Others could offer amendments limiting the levels of spending for defense programs. Assuming the measure is adopted with spending limitations, it will move to the Senate where the upper chamber is unlikely to accept the reduced spending levels.
This potential impasse has already caused some to predict that another short-term CR into the spring will be necessary in order to avoid a government shutdown while Republican and Democratic leaders try to come to an agreement on ways to fund the government through September 30th.
STATE OF THE UNION
Members of Congress from both sides of the aisle showed their solidarity and efforts toward civility in the wake of the Tucson shootings by eschewing tradition and sitting together, as President Obama delivered his second State of the Union address the evening of January 25.
During his speech – which lasted just over an hour – the President touched on broad themes in a call for cooperation with Republicans in areas such as medical liability reform, an overhaul of the tax code and reining in federal spending. He called for a five-year freeze on discretionary spending that is not related to security, and that statement appeared to be an implicit indication that President Obama will resist the deeper cuts being pushed by House Republicans.
CBO DEFICIT ESTIMATE
On the morning following the State of the Union, the non-partisan Congressional Budget Office (CBO) increased its FY 2011 federal deficit projection to a record-high $1.480 trillion by September 30, 2011. These budget figures are far worse than earlier projections: In August 2010, the CBO projected the FY 2011 deficit would drop 13 months later to $1.066 trillion, after reaching $1.294 trillion by the end of FY 2010. In its latest projection, the CBO attributed the expected increase to both the “slow and tentative pace” of economic recovery and the extension in December 2010 of the 2001 and 2003 tax cuts.
The CBO report will likely add to growing calls to rein in the growing deficit and the quickly expanding national debt.
The next several weeks will bring additional action and increased rhetoric over the aforementioned fiscal matters. We continue to follow news from Capitol Hill closely and will provide you with updates as these and other federal developments occur.