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

Volume 18   Issue 3 - January 28, 2011

 

HOUSE LAYS FOUNDATION FOR APPROPRIATIONS WORK

This week’s House passage of H.Res. 38 gives leadership less than two weeks to develop a strategy for moving the FY 2011 appropriations process forward. Currently the federal government is running on a continuing resolution through March 4, 2011. H.Res. 38 cleared the House 256-165 and authorizes the House Budget Committee chairman to establish spending ceilings for the remainder of FY 2011. The primary target on the House side is “non-security” domestic discretionary spending, a budget category that is home to many state-federal programs. Some members want to see that number slashed by $100 billion to FY 2008 levels. Others have cited a target approximately half that amount. Both could reduce federal funds to states for the current fiscal year by 10 percent to 20 percent. Neither the Senate nor the administration have staked out a position other than staying essentially at FY 2010 levels and making no further reductions. House Majority Leader Eric Cantor said he wants to schedule a vote on a continuing resolution for the remainder of FY 2011 during the week of Feb. 14. Stay tuned. (NCSL staff contacts: Michael Bird, Jeff Hurley)


“GRIMMER” BUDGET OUTLOOK RELEASED

On Jan. 26, 2011, the Congressional Budget Office (CBO) released its updated Budget and Economic Outlook, which reported a near 40 percent increase in the projected federal deficit for FY 2011. The full report is available at http://www.cbo.gov/ftpdocs/120xx/doc12039/SummaryforWeb.pdf. The revised deficit projection is $1.480 trillion and would be the highest one-year federal deficit on record. Last month’s enactment of extended tax cuts, unemployment benefits, alternative minimum tax relief, payroll tax reductions and estate tax re-institution all contributed to the projected deficit increase. And, the 10-year picture the report paints is rosier than reality would conclude because CBO uses current law to calculate its projections. Current law says that the extended tax cuts will sunset, that the alternative minimum tax will not be patched and that Medicare payments to physicians will be slashed—issues on which Congress has traveled another path. Initially, the CBO report has fueled more discussion on developing a comprehensive plan to tame federal deficits and manage the nation’s debt. (NCSL staff contacts: Michael Bird, Jeff Hurley)


ON THE DEFICIT REDUCTION FRONT

This week President Obama reiterated his commitment to a five-year freeze on “non-security” domestic discretionary spending. Utah Senator Orrin Hatch and Texas Senator John Cornyn introduced a federal balanced budget amendment establishing a constitutional cap on federal spending and requiring two-thirds votes for tax increases. Minnesota Rep. Michelle Bachmann introduced her own spending reduction plan, recommending that states take over the federal highway and mass transit programs, finance homeland security and justice needs out of state funds only, and receive federal education money in block grants after abolishing of the U.S. Department of Education. For more information on deficit reduction proposals, read NCSL’s report on the various recommendations, available here: http://www.ncsl.org/default.aspx?TabId=21926. (NCSL staff contact: Michael Bird, Jeff Hurley)


FEDS TO THE STATES’ RESCUE?

This week House Majority Leader Eric Cantor uncompromisingly stated that states “have their own tools to deal with hard [fiscal] times” and do not need federal legislation authorizing state bankruptcy. Despite this statement, North Carolina Rep. Patrick McHenry intends to conduct House Oversight and Government Reform subcommittee hearings next month on state bankruptcy possibilities. Texas Rep. Randy Neugebauer introduced H.R. 344, which would prohibit the Federal Reserve from buying or selling state and municipal bonds. The introduction followed statements made last week by Federal Reserve Chairman Ben Bernanke to the Senate Banking Committee that despite the Federal Reserve’s authority to buy or sell short-term state and municipal revenue bonds, there is “no expectation or intention to get involved in state and local finance. “ (NCSL staff contacts: Michael Bird, Jeff Hurley)


HOUSE CONTINUES WEEKLY SPENDING CUT

On Jan. 27, 2011, the House approved legislation repealing the taxpayer check-off used to publicly finance presidential campaigns and party nominating conventions. H.R. 359 (Oklahoma Rep. Tom Cole) cleared the House 239-160. CBO estimates the legislation would save $617 million over 10 years. Unlike its two predecessors (reduced annual House spending and printing), H.R. 359 drew stated opposition from the administration and the Senate majority. (NCSL staff contacts: Michael Bird, Jeff Hurley [appropriations], Susan Parnas Frederick [elections])