TheWeekInCongress.com
Week Ending November 18, 2005
H.R.4241 To provide for reconciliation pursuant to section 201(a) of the concurrent resolution on the budget for fiscal year 2006.
{Editor's note: The House and Senate must still meet in conference to resolve differences between this bill and the Senate version, S 1932.}
BRIEF
As did the Senate last week, various House committees put forth proposed spending cuts 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, HR 4241. Urged by the White House the House version of this reconciliation and cut package has attempted to go well beyond the $35 billion target to cut as much as $51 billion or more in the process. Last minute negotiations and last minute analysis of changes in the bill indicate that after changes prior to the vote on November 17 the bill was only altered by about 2%.
Some highlights:
MEDICAID
Medicare spending or cuts were not considered by the House but Medicaid provisions nearly equaled the same efforts of the Senate: States could decrease spending and increase co-payments for recipients. Medical and energy aid for hurricane victims would be continued and digital TV license auction would allow for spending to help consumers purchase equipment to make their TVs compatible to digital transmissions.
Most ‘cuts’ involving healthcare are less so much cuts as they are reductions in program growth and tightening up on rules that have allowed those who are not poor enough to qualify for Medicaid but appear so after transferring assets in a fashion that reduces net worth. Spending for some health programs would be kept at current day levels over the next five years or so and therefore would constitute a savings of $8 billion over five years. Nursing home care, once cut off when home equity or the recipient exceeded $500,000 was raised to an equity of $750,000 thereby increasing the program coverage.
FOOD STAMPS AND CHILD HEALTH
Reductions in food stamp spending appears to revise a rule that automatically qualifies a recipient of one type of federal aid for food stamp aid when the recipient may not need the food stamp help. Most assistance for children appears to be unchanged, but additional or increased spending is included. The bill cuts all funding to states for help with collecting child support leaving the states to do the job on their own. States are authorized under the bill to impose a fee for such collections on the recipient of the collected support providing they are not in another public aid program. The change in food stamp rules would cause children of those affected to be taken off the free lunch at school program but they would be eligible for reduced rates for the meals.
FOSTER CARE
Foster care spending would be reduced to households in which the child is living with a relative.
THE 9TH CIRCUIT COURT AND NEW JUDGESHIPS
The provision addresses a long-standing interest among conservative forces in Congress to divide the 9th Circuit where most decisions considered too liberal of ‘activist’ are handed down on a variety of issues. A 12th circuit would be created and the President could appoint new judges in most circuits and districts. Several bankruptcy judgeships would be made permanent. The provision could spend nearly $750 million yearly to enact.
Sponsor: Representative Jim Nussle (R-IA-1st)
Vote: House leadership delayed continued debate on the bill until the week of November 14 through18. Passed House 217 to 215 November 17, 2005 (RC 601)
Cost to the taxpayers: Originally intended to cut $58 billion from the 2006 budget.
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MORE INFORMATION
MEDICAID; PRESCRIPTION DRUGS; HURRICANE KATRINA; DIGITAL TV
AGRICULTURE; PRICE SUPPORTS; NUTRITION; ENERGY; FOOD STAMPS
TRANSPORTATION; INCREASE IN VESSEL TONNAGE FEES
VISA FEES; NEW JUDGES; REORGANIZING THE 9TH CIRCUIT.
OIL DRILLING IN ALASKA AND THE COASTAL US.
MEDICAID; PRESCRIPTION DRUGS; HURRICANE KATRINA; DIGITIAL TV
MEDICAID AND PRESCRIPTION DRUGS
The primary change to the Medicaid program involves empowering States to lower benefits for some recipients, increase co-payments for others and better regulate through increased penalties for the transfer of assets that reduce financial worth and therefore qualify an individual for Medicaid when they may not actually be poor enough to qualify. Those with home equity of more than $500,000 would be ineligible for nursing home benefits. Applicants with annuities would be required to name the State as remainder beneficiary Payments for outpatient drugs would be lowered to 106 percent of the price drug makers charge retail outlets rather than a wholesale price previously used. States could limit the fees on dispensing drugs but could not lower them more than $8 per prescription. In the final version of the bill as passed, reduction in Medicaid spending were scaled back.
Although States may increase cost-sharing it may not, under the bill, increases would not apply to children and pregnant women and preventive services for children and pregnancy services for pregnant women. Sharing rates are expected to go from $3 to $5 co-pays and there is no limit for co-payments by individuals above the federal poverty level.
LONG-TERM CARE
States can expand benefits for long-term care and would encourage the purchase of long-term care insurance to protect more of their assets if they go into a nursing home.
The total provision is expected to save $11.8 billion through 2010.
Funding was cut for the Center for Disease Control programs
HURRICANE KATRINA
Regarding victims of Katrina, the bill extends and increases, temporarily, federal matching rates and makes some other changes that would expand the role of home- and community based services. The provision is expected to spend $3.5 billion over five years. $2.5 billion for health needs and $1 billion for energy needs.
Spending for Home Energy Assistance Program would be increased.
DIGITIAL TV
The forthcoming switch from current analog TV broadcasting to digital broadcasts would be facilitated by authorizing the Department of Commerce to auction licenses thereby adding revenue but the bill also provides for spending that revenue making it a spending increase. The effort is scored at saving taxpayers $16 billion through 2010. A billion would be spent to help consumers make the transition by providing up to 2 $40 vouchers per person to purchase a converter that would allow digital broadcasts on analog TVs; $500 million would help public safety agencies adapt their communications networks to digital, reimburse TV stations in New York City ($30 million) and $3 million would help low powered TV stations to make the conversion.
AGRICULTURE; PRICE SUPPORTS; NUTRITION; CONSERVATION AND ENERGY
COMMODITY PRICE SUPPORTS
Commodity support payments to agricultural interests would be reduced by 1% for 2006 and 2007 crops and upland grown cotton subsidies would be eliminated. Crops impacted are feed grains, oilseeds, wheat, cotton, rice and peanuts. No further reduction would be allowed for crop year 2010 and beyond. Producers could receive 50% of their support payments in advance.
ENVIRONMENTAL CONSERVATION
Watershed conservation funding would be limited to $50 million for 2007 and un-obligated balances from prior years would be rescinded. Total spending through 2010 would be $2.2 billion. Loans and grants to farmers for investment in renewable energy systems for improvements would be cut completely in 2007 to save $23 million. Rural firefighter assistance, broadband loans for distance learning, telemedicine and Value-Added marketing Program would be eliminated.
FOOD STAMPS
Food stamp payments would be reduced to save far less than the original $800 million but the program itself would be reauthorized through 2011. Countering that effort the bill would increase spending for the Emergency Food Assistance program. Eligibility for food stamps is where the reduction would come from as the bill raises the bar on who can receive the benefits. Primarily the bill would only allow for those already receiving cash assistance in the Temporary Assistance for Needy Families program to qualify for food stamps. Those in the TANF program receiving non-cash payments such as job placement payments would not qualify for food stamps. It was calculated by the committee that 225,000 individuals would lose about $45 per month in food stamp benefits. Those households would not automatically be eligible for free school meals for their children but most of them would be eligible for reduced prices on meals. The committee noted that 40,000 children would lose current benefits that would total about $185 per child per year. The final version of the bill as passed lessened the impact of the cuts on food stamps and school lunches.
Research, agricultural extension programs and education grants would save $460 million through 2010. Normally paying 50% of the cost of food stamps, States under this bill would be reimbursed 100% for stamps distributed in the Hurricane Katrina impacted areas.
Qualified legal permanent residents can receive food stamps after five years US residence but this bill would extend that qualification to seven years.
TRANSPORTATION; INCREASE IN VESSEL TONNAGE FEES
The bill would increase through 2010 per-ton duties on vessels entering US ports. Vessels from the Western Hemisphere would see a rate hike from 2 cents per ton (cpt) to 4.5 cpt up to a maximum annual duty of 22.5 cpt. Vessels from foreign ports would see an increase from 6 cpt to 13.5 cpt to a maximum annual duty of 67.5 cpt.
ASSISTANCE TO FAMILIES AND CHILDREN; FOSTER CARE; SHILD SUPPORT SERVICES; SOCIAL SECURITY AND ANTI-DUMPING.
Temporary Assistance to Needy Families and child care programs would be extended through 2010 to spend up to $79 billion for TANF and $12.6 billion for child care through 2010. The increase reflects savings of $8 billion through 2010 as the spending remains constant at 2006 levels.
The saving in this element of the bill were expected to come from reductions in payments to States for child-support enforcement programs, as the CBO noted but the final version of the bill as passed modified that provision. Healthy Marriage Promotion Grants to States would be eliminated. The program rewarded states for reducing out-of-wedlock birth rates. The bill, however creates a new healthy marriage program. Eliminating the old program would save $496 million through 2010 and the new program would spend up to $500 million through 2010. The money could be spent for public advertising, education and training related to marriage and marriage-mentoring programs.
Supplemental grants to areas experiencing population increases for states and also for those that have a lower than average TANF grant spending record. A program that bonuses states for high-performance in moving welfare recipients to jobs, providing support for low-income working families and keeping families intact would be eliminated to save $1 billion. States are given more flexibility in spending grant monies but still must show increases in moving recipients to work or face up to a 5% cut in grants for the poor.
CHILD CARE AND CHILD SUPPORT
Child care grants are increased by $500 million through 2010.
Federal funds to aid state child support enforcement programs would be reduced with the intent to force states to impose user fees on recipients who utilize those services to collect child support. The effort is expected to save $4.9 billion through 2010. The bill allows for states to give to recipients, a percentage of child support collected through the state’s effort. The amount returned could not exceed $100 per month or $50 more than the state would have paid whichever is greater. A $25 fee would be imposed on families that did not receive TANF funds but used the program to collect support above $500 per year. The fee would be split by state and federal governments relative to administrative costs.
Non-custodial parents owing more than $2.500 in past-due child support can be denied a passport.
FOSTER CARE
Cost neutral child welfare demonstration projects on a state level would be continued. In the 9th circuit payments would be reduced for foster care for children living with a relative outside the home from which the child was removed by a court. About 4,000 children are estimated to see the reduced payments each month to save $397 million through 2010. States impacted would be Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.
SOCIAL SECURITY-SUPPLEMENTAL SECURITY INCOME
20 % of disability applicants would be scrutinized for eligibility and the percentage would rise to 50% by 2007 and beyond. Of the average 380,000 applications for disability expected through 2015 this provision expects to result in rejecting 20,000 of them to save an estimated $300 million. Social Security is required to turn past due ‘lump sum’ disability payments into scheduled payments that would not save money but would delay outlays over time.
ANTI-DUMPING
“Antidumping duties are imposed on imports that are thought to be priced too low, and countervailing duties are imposed on imports that are thought to be subsidized by foreign governments” the CBO explained. The bill would change current law to stop paying fines paid by dumpers to the US industries impacted by under-priced imports.
VISA FEES; NEW JUDGES; REORGANIZING THE 9TH CIRCUIT.
VISAS
Multinational businesses seeing temporary admission of an employee to the US as an intra-company transfer (L-1 non-immigrant visa) would pay $1,500 per employee. The change is expected to impact 70,000 people annually.
JUDGESHIPS
12 new circuit judgeships and 56 new district judgeships would be created (permanent and temporary positions) and 17 bankruptcy judgeships would be changed to permanent status. Administrative costs for the 93 new positions is calculated at $560,000 yearly and other expenses raises the cost to $270 million over five years. Increased judgeships would require increases in US Marshal services and support staff to add $110 million over five years.
Most significant to this provision is the redistribution of states under the 9th circuit and the creation of a 12th circuit. The 9th circuit has continuously be perceived by conservatives in Congress as producing liberal decisions that create laws rather than interpret behavior in the context of the law.
The bill 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 $130,000 and would increase coverage for retirement accounts to $260,000.
Municipal deposits coverage would increase to $2 million or the total of the standard coverage plus 80% of any amounts above that level.
EDUCATION (STUDENT AID)
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 DRILLING IN ALASKA AND THE COASTAL US.
The bill attempted to increase revenues from the sale of oil and gas exploration leases in the Alaskan National Wildlife Reserve in Alaska and within the Outer-Continental Shelf, offshore of southern US states but the final bill removed the ANWR drilling provision Prior to debate on the bill. bill. ANWR drilling leases were projected to bring in $2.5 billion and OCS leases nearly $900 million and $1.6 billion over five years. Other federal land revenue efforts include mining on federal land to save $158 million and sales of federal land to bring in $128 million. Moratorium on ICS exploration expires in 2012 therefore little immediate revenue is expected from those leases.
The OCS provision comes with some new spending that includes payments to states and local governments, natural resources enhancement spending, mineral education engineering provisions; and geological mapping to total $773 million through 2010.
The bill would authorize sales of 7,500 acres of federal land in Nevada and Idaho to bring in $3 million and 150 acres of National Park Service land in the District of Columbia (Poplar Point on the Anacostia River, 30 acres of parking around RFK stadium and 11 acres adjacent to S. Capitol street and some smaller area plots in South West and South East.
Oil shale and tar sand leases on taxpayer land are to be let out for pre-leasing as it is that the expense of extracting oil from those areas is high and the price of oil in the market would impact the cost-risk ratio. The Sec. of Interior is authorized to lease out up to 35% of federal lands that have the potential for oil shale and tar sand extraction.
## All Rights Reserved. © 2005 TheWeekInCongress.com.
No reproduction or distribution without written permission from TheWeekInCongress.com.