TheWeekInCongress.com
Week Ending February 3, 2005
S.1932 An original bill to provide for reconciliation pursuant to section 202(a) of the concurrent resolution on the budget for fiscal year 2006 (H. Con. Res. 95).
BRIEF
Various Senate committees put forth proposed spending cuts as was required under the US budget as proposed by the President in February and passed some months later by the House and the Senate as HCR 95. Those recommendations were tucked into this bill, S 1932. The Senate, urged by the White House and the House of Representatives determined to provide $50 billion in cuts seeks $39 billion, $4.3 billion more that the $34.7 billion goal set by the Budget Resolution. The Senate actually cut $51 billion but increased spending regarding education grants and FCC governed broadband and other electronic spectrums. There were also changes that would increase revenue to the Treasury.
The Senate looked to cuts in mandatory spending accounts that include Medicare and Medicaid and child health programs; support payments to farmers, sugar growers, cotton and dairy. But it isn’t all cuts in the bill. Increases in lending rates for student loan providers, revenue from leases to drill for oil and gas in Alaska as well as revenue from oil and gas extracted would increase revenues along with provisions that raise premiums for banks and thrifts for deposit insurance and increases in certain non-immigrant visas allowing foreigners to work in America. Spending would increase for grants for higher education.
{Provisions in the bill showed potential savings or spending increases out ten years but TheWeekInCongress.com will quote only five year totals because even that period of time will produce many unpredictable events that could change any and all budget projections}
The areas of highest savings, spending reductions or revenue increases are $17 billion in student loan subsidy changes including increased interest rates for parent borrowers and increased costs to lenders of federal student loan funds, $10 billion from auction of electromagnetic spectrums such as broadband and other electronic communication devices and a saving of $6.7 billion from reorganizing deposit insurance and related activities. The Alaska oil and gas drilling is expected to produce a flat $2.5 billion over ten years but would be realized within five years.
All totaled the bill would provide savings around $51 billion over five years but would increase spending by about $12 billion for higher education grants and increasing the amount of money students can borrow for college and graduate school education ($8 billion) and spending revenues from the spectrum auction ($4 billion).
Amendment activity failed to stop the Alaska Oil provisions but another amendment provided that oil and gas from Alaska can not be sold outside the US. An amendment that would require depositing fifty percent of the revenue from oil and gas contracts in the US Treasure failed to pass.
Funding for AMTRAK remains intact.
An amendment to hold Medicare recipients harmless against the proposed increase in Part B Medicare premiums failed as did other consumer oriented amendments such as the attempt to move further to the future the switch from current television transmissions to digital, a move predicted to cause Americans to have to buy new TVs equipped to receive the digital signal. An amendment effort to cut $2 million from the fund that allegedly will help provide converters for TVs not digitally equipped failed.
Two financial management amendments, one to cap non-defense, non-trust-fund, discretionary spending at the previous fiscal year's level, beginning with fiscal year 2007 and another to reinstate PAYGO failed. PAYGO was the 1990 Budget Reconciliation mechanism that required lawmakers to find the money for a spending increase either from cutting other spending or raising taxes. PAYGO was instrumental in the effort throughout the 1990s to reduce the budget deficit and begin creating surpluses.
Sponsor: Senator Judd Gregg (R-NH)
Vote: Passed Senate 52 to 47 November 3, 2005 (RV 303) The bill Passed the House amended 212 to 206 (RC 670) The Senate agreed to concur to the House 51 to 50 with the Vice President casting the deciding vote (RV 363).
Cost to the taxpayers: The CBO estimate is that the bill will reduce spending by $6.1 billion in 2006 and $39.1 billion through 2010. The estimate for spending reductions through 2015 is $108.7 billion.
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MORE INFORMATION
MEDICARE, MEDICAID, LONG-TERM CARE AND SPENDING INCREASES
AGRICULTURE, DAIRY AND SUGAR SUPPORT PAYMENTS
INCREASED NON-IMMIGRANT FOREIGN WORKER VISA FEE
EDUCATION AND PENSION BENEFIT GUARANTEES
OIL AND GAS DRILLING IN ALASKA
MEDICARE, MEDICAID, LONG-TERM CARE AND SPENDING INCREASES
Medicare and increased payments to healthcare providers
The Senate Finance Committee recommended cuts to Medicare, Medicaid, and the State Children’s Health Insurance Program. According to a CBO analysis 54% of the cuts would be from the Medicare program. Some of the savings, though, would result from an accounting mechanism that would stall some payments to healthcare providers until after the end of September, 2006 (the end of the fiscal year). Medicare payments to providers would actually be increased in the bill for the next three years with a promise to begin reducing them after 2009.
Payments would be reduced to Medicare Advantage programs to save $11.9 billion over five years. Health status of individuals that impacts the amount of reimbursements to Medicare Advantage plans would be changed to save $6.5 billion.
Funds to support preferred provider organizations (PPOs) to establish themselves in regions that might not fully support them financially are ended to save $5.4 billion over five years.
$4.5 billion would hoped to be saved by reducing payments to physicians, hospitals, home health agencies and nursing facilities from 1% growing to 2% over five years if the facilities do not improve quality of care or report on quality of care improvement efforts. The predetermined reduction in payments to physicians of 4.3 percent in 2006 would be changed to no less than 1%. Making up the difference is left to future years.
Medicaid, prescription drug payments and Child Health Programs
Medicaid spending cuts would limit payments for outpatient prescription drugs and reduce the number of case management services. Rebates that Medicaid gets from drug manufacturers would be increased. Currently, Medicaid pays pharmaceuticals for drugs at wholesale prices but this bill would change the cost of those drugs to totals based on 105% of the price pharmaceuticals charge retail buyers. The CBO estimates that the increase in cost of those drugs would be offset at a State level by increases in dispensing fees imposed by the States. Prescription drug rebates would change from the current 15.1% of the retail formula price to 17% and the flat rebate for generic drugs would rise from 11% to 17%. States would collect rebates on drugs administered by doctors.
Although these actions would save money, the money would be partly used up by temporary increases equaling around $1.7 billion in 2006 for matching funds to medical aid in Alabama, Louisiana and Mississippi and payments by some States for some disabled children. SCHIP would spend an additional $160 million over five years for States that have used up their allotments. Use of SCHIP funds for childless adults is prohibited.
Long-Term Care
Penalties would be increased for individuals who transfer assets for less than fair market value to reduce their appearance of wealth and qualify for Medicaid paid nursing home care. The bill also encourages a type of insurance that would protect assets if expensive nursing home care is required. The type of annuities and other financial instruments that a Medicaid beneficiaries or their spouses can hold would be restricted and require the Medicaid applicants to name the State as remainder beneficiary to the extent of Medicaid’ spending for that individual.
Taxpayers would benefit around $15 billion from spending $403 million over five years to halt Medicaid payments to individuals who are also covered by private insurance thereby saving $512 million.
Podiatry and increased payments to some disabled children
Podiatry medical care would be covered. Disabled children who would not qualify for Supplemental Security Income because the family income exceeds Federal limits would, in 2008, begin to qualify if their family income is at least 300% of the federal poverty level.
Test Projects
A project is started whereby the federal government would pay 90% of the first 12 months of home and community-based long-term care for Medicaid recipients who used to be in nursing homes. The effort would increase spending by $105 million over five years. Another project would spend $217 million over five years to provide home-and community-based services to disabled children who would otherwise require psychiatric residential treatment and make changes to when an individual is eligible for SSI.
Other Spending Increases.
Payments for dialysis, hospital outpatient services and small hospitals would increase to expand coverage for therapy services and funding to nursing facilities with bad debt would be reduced. Certain durable medical equipment must be purchased after 13 months of leasing.
Premiums for Medicare Part B that covers medications and medical supplies would be increased beginning 2007 but would not impact total spending.
AGRICULTURE, DAIRY AND SUGAR SUPPORT PAYMENTS
Many payments to agricultural producers through the Commodity Credit Corporation would remain relatively unchanged through 2011 crop year for payments, marketing, loans and bad loan coverage for producers of feed grains, oilseeds, wheat, cotton, rice and other commodities, the CBO reported, as well as peanuts, sugar and milk price supports to help them compete in the world markets. To continue those payments and adjustments through 2011 would require spending $55 billion from 2008 through 2013.
The bill would reduce by 2.5% all direct and countercyclical payments and marketing assistance loans for 2006 through 20101 crops and then restore the payments in 2011. Payments to the dairy industry Market Loss Payments would be reduced by 2.5%. The overall plan is estimated to save $1.3 billion over five years.
Cane and beet sugar producers who decide to forfeit their marketing loans for 2006 through 2010 would be penalized 1.2%. Marketing loans for US sugarcane are set at 18 cents per pound of raw cane and to US sugar beets are set at 22.9 cents per refined pounds and remain unchanged. The 1.2% penalty is expected to reduce the number of forfeited loans and save $65 million over five years.
Cotton
Support for upland grown cotton when US cotton prices are higher than world market prices is ended effective August 1, 2006. The CBO calculates, though, that reducing the supports for upland cotton will reduce cotton exports by 2.5% and reduce domestic mill use and the result would be a reduction in domestic cotton prices up to 2 cents per pound.
Dairy
Payments to cover the loss of the milk industry would be continued through September 30, 2007 costing $998 million through 2010. Milk producers would receive ‘a payment based on 34 percent of the difference between a specified target price of $16.94 per hundredweight and the announced Boston Class I price, multiplied by their monthly milk production, and subject to a cap of 2.4 million pounds per calendar year.
Grain, peanuts and cotton producers can request 50% of their annual payment in advance.
Conservation
Farmers can opt to conserve acreage and grow environmentally significant crops for pay. The national acreage level for the program of 39.2 million acres is reduced to 36.4 million acres through 2010 and back up to 38.3 million acres in 2011. The change is expected to save $640 million over five years.
Environmental Quality Incentives Program through which farmers and ranchers receive funds and tech help to implement environmentally sound agricultural practices would be cut a little over $100 million for five years.
Agricultural research and extension grants would be reduced around $20 million yearly through 2010 and then raised to $200 million in 2011.
INCREASED NON-IMMIGRANT FOREIGN WORKER VISA FEE
A $500 filing application fee for employment based permanent visas for professors, researchers, advanced degree holders and other professionals would be imposed, says the CBO. The visas are multi-year. 30,000 visas would be available yearly for the $500 fee each when another non-immigrant visa, the H-1B, allotments are used up. The total amount of visas available are 310,000 to be made available over ten years.
Multinational employers who want to transfer employees intra-company would pay $750 for the L-1 visa and is calculated to apply to 70,000 persons yearly.
the current charge for the H-1B visa is $100.
The Senate would merge the Bank Insurance Fund that supports the FDIC and the Savings Association Insurance Fund that covers thrifts and credit union deposits into the Deposit Insurance Fund and would give the new fund flexibility in setting premium rates paid by banks and thrifts. Some uninsured institutions would be covered by the DIF thereby increasing the risk of bailing out failed banks now calculated as costing $8.4 billion through 2015 after losing $38.6 billion and recouping $30.2 billion from selling off assets.
The bill would drop required reserves for banks from fixed 1.25% to a float between 1.15% and 1.5%. That provision and the merge of funds is projected to save $2.8 billion over ten years. Premiums paid by banks would depend on the health of the institution and the risk involved. The DIF is expected to raise premiums beginning in 2006 and realize an increase of insured institutions to total an additional $4 billion in premiums by 2011.
The bill would increase deposit insurance to increase coverage of accounts from $100,000 to $250,000 and would increase coverage for retirement accounts starting in 2010
EDUCATION AND PENSION BENEFIT GUARANTEES
The bill would leave the 6.8% borrowing rate for students seeking financial aid but would increase from 7.9% to 8.5% the rate parents pay for the same loan. More significant to financial savings is a revision in the amount a lender can claim as a yield on a student loan. Lenders may borrow money from the Treasury to lend at a higher rate and have enjoyed retaining profits at a high rate. The bill would provide for a different formula in which lenders rebate at a higher level. This provision is expected to produce over $15 billion over five years. More income would be made by replacing an arbitrary insurance rate of 1% on loans with a fixed 1% premium to save an additional $1.5 billion over five years.
But not all is about cutting spending. Some provision increase spending. $11.5 billion would be spent in the next five years. Origination fees paid by borrowers would drop from 3% to 2.5% causing a loss of revenue. The direct loan fee would vary around 1.25%. More money would be made available to borrow by increasing from $2,625 and $3,500 to $3,500 and $4,500 and graduate school loans would go up from $10,000 to $12,000. The Pell Grant program would be supplemented with $9.5 billion over five years through the Provisional Grant Assistance program and the National Science and Mathematics Access to Retain Talent program.
Current law prohibits education loans to those convicted of illegal drug use for a period related to the frequency of conviction and shortened if the student is enrolled in rehabilitation. The bill would only apply those restrictions to students convicted while already in the loan program. Applicants would no longer be required to report any prior convictions when applying for student aid.
Some loans for certain teachers in areas of high need would see payments for their loans cancelled.
The Pension Benefit Guarantee Corporation that subsidizes corporate pension plans should they fail would require increases in premiums. Single employer plans that paid $19 per participant would now pay $46.75 per participant by 2010 and $67 per employee by 2015. Multi-employer plans that pay a flat rate of $2.60 per employee would pay an increase to $8.00 per participant.
OIL AND GAS DRILLING IN ALASKA
The Secretary of Interior is directed to establish an oil and gas leasing program for Alaska’s Arctic National Wildlife Refuge (ANWR). Half of the proceeds would go to Alaska and the other to the US Treasury. It is calculated that the provision will reduce spending by $2.5 billion over five years.
The Federal government would gain revenue from auctioning leases to develop oil and gas rights and the from yearly rent, the CBO calculated. Two leas sales would be held before 2010 and the existing environmental impact statement is the one they will go by.
2. S.AMDT.2347 to S.1932 To provide amounts to address influenza and
newly emerging pandemics.
Sponsor: Sen Frist, William H. [TN] (introduced 11/1/2005)
Cosponsors (1)
Latest Major Action: 11/2/2005 Considered by Senate.
6. S.AMDT.2351 to S.1932 To fully reinstate the pay-as-you-go
requirement through 2010.
Sponsor: Sen Conrad, Kent [ND] (introduced 11/1/2005) Cosponsors (9)
Latest Major Action: 11/2/2005 Considered by Senate. FAILED 50 TO 49 (RV
283)
7. S.AMDT.2352 to S.1932 To provide elementary and secondary education
assistance to students and schools impacted by Hurricane Katrina and to lower
origination fees.
Sponsor: Sen Enzi, Michael B. [WY] (introduced 11/1/2005) Cosponsors
(7)
Latest Major Action: 11/2/2005 Considered by Senate.
10. S.AMDT.2355 to S.1932 To cap non-defense, non-trust-fund,
discretionary spending at the previous fiscal year's level, beginning with
fiscal year 2007.
Sponsor: Sen Inhofe, James M. [OK] (introduced 11/1/2005) Cosponsors
(5)
Latest Major Action: 11/2/2005 Considered by Senate. FAILED 32 TO 67 (RV
286)
11. S.AMDT.2356 to S.1932 To provide emergency health care and other
relief for survivors of Hurricane Katrina.
Sponsor: Sen Lincoln, Blanche L. [AR] (introduced 11/1/2005)
Cosponsors (4)
Latest Major Action: 11/2/2005 Considered by Senate. FAILED 48 TO 51 (RV
285)
12. S.AMDT.2357 to S.1932 To hold Medicare beneficiaries harmless for
the increase in the 2007 Medicare monthly part B premium that would otherwise
occur because of the 2006 increase in payments under the physician fee schedule.
Sponsor: Sen Nelson, Bill [FL] (introduced 11/1/2005) Cosponsors (9)
Latest Major Action: 11/2/2005 Considered by Senate.
13. S.AMDT.2358 to S.1932 To strike the title relating to the
establishment of an oil and gas leasing program in the Coastal Plain.
Sponsor: Sen Cantwell, Maria [WA] (introduced 11/2/2005) Cosponsors
(14)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
FAILED 48 TO 51 (RV 288)
14. S.AMDT.2359 to S.1932 To clarify certain payment limitations
applicable to certain payments under title I of the Farm Security and Rural
Investment Act of 2002 and section 1101 of the Agricultural Reconciliation Act
of 2005 and to partially restore funding to programs reduced by section 1101,
1201, and 1202 of the Agricultural Reconciliation Act of 2005.
Sponsor: Sen Grassley, Chuck [IA] (introduced 11/2/2005) Cosponsors
(12)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
FAILED 46 TO 53 (RV 290)
15. S.AMDT.2360 to S.1932 To reauthorize Amtrak, and for other
purposes.
Sponsor: Sen Lott, Trent [MS] (introduced 11/2/2005) Cosponsors (11)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
PASSED 93 TO 6 (RV 292)
17. S.AMDT.2362 to S.1932 To enhance the energy security of the United
States by prohibiting the exportation of oil and gas produced under leases in
the Arctic National Wildlife Refuge.
Sponsor: Sen Wyden, Ron [OR] (introduced 11/2/2005) Cosponsors (6)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
PASSED 83 TO 16 (RV 289)
20. S.AMDT.2365 to S.1932 To prevent a severe reduction in the Federal
medical assistance percentage determined for a State for fiscal year 2006 and to
extend rebates for prescription drugs to enrollees in Medicaid managed care
organizations.
Sponsor: Sen Bingaman, Jeff [NM] (introduced 11/2/2005) Cosponsors
(4)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
PASSED 54 TO 45 (RV 291)
21. S.AMDT.2366 to S.1932 To provide funds for payments to producing
States and coastal political subdivisions under the coastal impact assistance
program.
Sponsor: Sen Landrieu, Mary L. [LA] (introduced 11/2/2005) Cosponsors
(None)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
22. S.AMDT.2367 to S.1932 To replace title VIII of the bill with an
amendment to section 214(c) of the Immigration and Nationality Act to impose a
fee on employers who hire certain non-immigrants.
Sponsor: Sen Byrd, Robert C. [WV] (introduced 11/2/2005) Cosponsors
(None)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
FAILED 44 to 55 RV 296
23. S.AMDT.2368 to S.1932 To cut $2,000,000,000 from the converter box
subsidy program.
Sponsor: Sen Ensign, John [NV] (introduced 11/2/2005) Cosponsors (4)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
FAILED 31 TO 68 (RV 284)
25. S.AMDT.2370 to S.1932 To move forward the date on which the
transition to digital television is to occur.
Sponsor: Sen McCain, John [AZ] (introduced 11/2/2005) Cosponsors (2)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
FAILED 30 TO 69 (RV 293)
27. S.AMDT.2372 to S.1932 To provide a 6-month transition period for
coverage of prescription drugs under Medicaid for individuals whose drug
coverage is to be moved to the Medicare prescription drug program.
Sponsor: Sen Murray, Patty [WA] (introduced 11/2/2005) Cosponsors
(6)
Latest Major Action: 11/2/2005 Senate amendment proposed (on the floor)
FAILED 43 TO 56 (RV 294)
47. S.AMDT.2392 to S.1932 To provide that the language on page 41,
beginning on line 3 through line 11, entitled Amendments to the Balanced Budget
and Emergency Deficit Control Act of 1985, be stricken.
Sponsor: Sen Gregg, Judd [NH] (introduced 11/2/2005) Cosponsors
(None)
Latest Major Action: 11/2/2005 Senate amendment agreed to. Status:
Amendment SA 2392 agreed to in Senate by Unanimous Consent.
Byrd Amendment No. 2367, to replace title VIII of the bill with an amendment to section 214(c) of the Immigration and Nationality Act to impose a fee on employers who hire certain non-immigrants. FAILED 14 TO 85 (RV 295)
Lautenberg Amendment No. 2381, to require certification prior to beneficiary enrollment in a prescription drug plan or an MA-PD plan that has a gap in the coverage of prescription drugs under part D of title XVIII of the Social Security Act. FAILED 43 TO 56 (RV 297)
Cantwell Amendment No. 2400, to ensure the payment to the Treasury of the United States of 50 percent of revenues from oil and gas leasing and production on the Coastal Plain (ANWR). FAILED 48 TO 51 (RV 298)
Schumer Amendment No. 2348, to lower fees for generic drugs in Medicaid program. FAILED 49 TO 50 (RV 299)
Reed Amendment No. 2409, to preserve funds for programs to help homeless children and people with mental illness. FAILED 46 TO 52 (RV 300)
Reed Amendment No. 2396, to preserve HUD funding for affordable housing programs. FAILED 48 TO 51 (RV 301)
Snowe amendment #2371 (RV 302)
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No reproduction or distribution without written permission from TheWeekInCongress.com.