Capitol to Capitol
An Information Service of NCSL's Standing Committees

Volume 18   Issue 27 - July 22, 2011


FEVER PITCH

Just 11 days remain until the U.S. government reaches its debt limit. Negotiations are frenzied, but inconclusive. A potpourri of options is being discussed, with varying opinions on the depth of savings and mechanisms to cut federal spending or increase revenues. On Tuesday the highly-anticipated Senate “Gang of Six” released its proposal to reduce the deficit by $3.7 trillion over the next decade through cuts to discretionary spending, a retool of the tax code and savings from entitlement programs. The plan, which would implement an immediate down payment of $500 billion, appears to have hit a roadblock as the Congressional Budget Office will not have time to complete a fiscal analysis of the proposal before Aug. 2. Several other options appear to be on the proverbial table. These include a “grand bargain” between President Obama and Speaker John Boehner of Ohio which would contain $3 trillion in spending cuts over the next 10 years along with a promise to reform the tax code next year. Another proposal, authored by Senate Majority Leader Harry Reid of Nevada and Senate Minority Leader Mitch McConnell of Kentucky, would increase the debt limit by $2.5 trillion over three installments with corresponding cuts in spending. The Senate on Friday defeated the Cut, Cap and Balance Act of 2011, H.R. 2560, by a vote of 51-46, despite having passed the House Tuesday 234-190. H.R. 2560 would cut federal discretionary spending for FY 2012, cap annual spending at 19.9 percent by FY 2021 and offers a constitutional amendment to balance the budget in exchange for raising the debt limit. With the possibility of the federal government defaulting, NCSL has assembled a ‘cheat sheet’ on the implications a default could have on states, available here: http://www.ncsl.org/default.aspx?TabId=23270. NCSL Staff Contacts: Michael Bird, Jeff Hurley


ARE THE SKIES FRIENDLY?

When the clock strikes midnight, state airport improvement grants, the Essential Air Service Progam, airport and airways trust fund revenues and anything related to the Federal Aviation Administration expire. That’s because Congress is deadlocked on yet another issue. The Senate is poised to pass a 21st, yes 21st, temporary extension of aviation program authority (S.1387). The House has passed H.R. 2553, a short-term extension that includes some policy embellishments that drew the ire of the Senate. Bottom line: the House is intent on closing down some Essential Air Service airports; the Senate is not. This difference builds from a handful of other policy conflicts that have stymied negotiations over a long-term reauthorization. Those include possible expansion of flights from Reagan National Airport and changes to mechanisms governing airline industry union elections. The White House has allied itself with the Senate on the short-term extension. Stay tuned – this flight may be delayed! NCSL staff contacts: Molly Ramsdell, Helen Narvasa


PREEMPTION “KING” STRIKES AGAIN

Preemption of state financial services laws as they might apply to national banks continues. Despite language in last year’s Dodd-Frank financial services reform law, the Office of the Comptroller of the Currency released a final rule on July 20 that confirms that the independent agency did not get or will not heed the message in Dodd-Frank. After stating it would delete a 2004 regulation that created a firewall around national banks from state laws conflicting with OCC’s perceived authority, the agency has returned to its “obstructs, impairs, or conditions” threshold for judging (the agency uses the term “re-examine”) state laws against national bank activities. The new regulation has greater punch since OCC is now vested with regulating thrifts. The OCC’s handiwork is found at:http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-95a.pdf. NCSL staff contact: James Ward


GROUNDHOG DAY

Despite having two months to finalize FY 2012 spending bills, it appears likely the federal government will need to pass a continuing resolution when FY 2011 ends in September. The House Appropriations Committee, which hoped to complete half its appropriations measures by Friday with the passage of the legislative branch bill, has been forced to postpone several markups after an industrious start to the appropriations calendar. In the other chamber, the Senate was able to pass only its first spending bill this week with the approval of the military construction-veterans affairs appropriations bill, H.R. 2055. According to House Appropriations Chairman Harold Rogers of Kentucky, once Congress reconvenes in September the committee will surrender work on finalizing spending bills for FY 2012 and will focus on a stopgap measure to ensure funding continues for the new fiscal year. NCSL Staff Contacts: Michael Bird, Jeff Hurley


PUBLIC SAFETY SUFFERS SETBACK

Momentum to provide our nation’s first responders with much-needed enhanced communications capability before the 10th anniversary of 9/11 was slowed this week with the Congressional Budget Office’s lower than anticipated revenue score of S. 911, the SPECTRUM Act.  The bill would generate revenue for deficit reduction and building a nationwide interoperable broadband network for public safety through incentive auctions. Broadcasters would voluntarily relinquish some of their spectrum for auction and receive a share of the proceeds. Additionally, a portion of spectrum known as D Block would be reserved for public safety, which NCSL and other state and local government organizations requested. The author of the bill, West Virginia Senator John Rockefeller, is working to incorporate the language as part of a larger deficit reduction package. Observers, however, suggest the legislation may need modification to raise more than the estimated $6.5 billion for deficit reduction. Lead House members on spectrum auction speculated this week that this issue may be wedged into a deficit reduction/debt ceiling deal without public safety provisions. The latest Congressional Budget Office score is available here: http://www.cbo.gov/ftpdocs/123xx/doc12322/s911.pdf. Stay tuned. NCSL staff contact: James Ward