‘Line’ Items: War Supplemental Finally Passes; Small Biz Bill Not So Lucky
House Gone, Senate Eyeing the Exit – The House started its six-week recess Friday and the Senate will adjourn at the end of this week. Debate and a vote on the nomination of Elena Kagan to the Supreme Court is expected to take up a lot of the schedule, and oxygen, this week for senators.
War Supplemental Adopted – The president signed a supplemental spending bill to finance operations in Iraq and Afghanistan last week after a protracted battle in Congress over additional domestic spending that the House tried to tack on. In the end that extra spending was dropped. The bill also includes $2.8 billion to support relief efforts in Haiti; $5.1 billion to FEMA’s Disaster Relief Fund; 13.4 billion for Vietnam veterans exposed to Agent Orange and about $112 million for activities relating to the Gulf Coast oil spill. The bill’s total cost of $59 billion was deemed emergency spending, and thus not offset.
Small Business Bill Languishes in Senate – The Senate failed to break a filibuster last week to vote on legislation providing $12 billion in tax breaks and a $30 billion lending fund for small businesses. Without an agreement between Democrats and Republicans on the number of amendments that will be considered, no action will occur this week.
Approps Pause – Despite some activity last week, the FY 2011 appropriations process remains behind schedule, and not much action is expected in the Senate this week, increasing the likelihood of an omnibus spending bill after the elections.
Senate to Vote Today on State Funding – Later today the Senate will hold a cloture vote on a measure to provide $10 billion to states and localities to avoid teacher layoffs and $16 billion for a six-month extension of Medicaid aid to states. The total cost is offset through closing foreign tax credit loopholes, cuts in Medicare drug pricing, spending rescissions, and ending an increase in food stamp funding that was included in the stimulus.
CBO Speaks on Possible Fiscal Crisis – Last week the Congressional Budget Office released a report on “Federal Debt and the Risk of a Fiscal Crisis.” CBO echoed CRFB’s contention that our mounting debt could precipitate a fiscal crisis, either gradually or abruptly.
Fiscal Commission Hears from CRFB – CRFB President Maya MacGuineas and board member Barry Anderson testified before the White House National Commission on Fiscal Responsibility and Reform last week. MacGuineas discussed the work of groups like the Peterson-Pew Commission on Budget Reform and the need for a credible fiscal plan. Anderson testified on lessons to be learned from other countries.
Deficit Will be Big Issue at the Ballot Box – According to a recent Congressional Connections poll, more Americans support reducing the federal budget deficit to cutting taxes or increasing spending to stimulate the economy. And candidates are making the deficit a campaign issue as the mid-term elections draw near.
Budget Committee Will Look at Economy – The Senate Budget Committee will hold a hearing tomorrow on “A Status Report on the U.S. Economy.” Witnesses will be Richard Berner of Morgan Stanley; Simon Johnson of MIT, and Joel Naroff of Naroff Economic Advisers.