Where Do Things Stand?

Introduction

One might say Washington continues to be embroiled in political gridlock. Some of it is a result of intra party differences rather than inter party differences, especially when it comes to the budget and immigration reform. But, significant policy differences remain between the parties when it comes to the reauthorization of the Elementary and Secondary Education Act (ESEA) [aka No Child Left Behind], deficit reduction, debt ceiling, student loan interest rates, farm bill, sequestration and other pending issues. Three different ESEA reauthorization bills were offered during the week of June 3 — two in the Senate and one in the House. More below.

Ironically not one of the current political crises/scandals facing the Administration has been dubbed a “gate,” so they each move on separate tracks, and depending on the day, trumping each other for airtime and ink in the press.

The good news is that Congress is at least trying to address numerous issues through legislation, committee work and floor debate. Will it finalize any legislation or issues — that is the fundamental question?

The Budget

Taking front and center stage in the battle of political posturing is the budget and the inability to establish a conference committee by the two houses is a result of a select few Senate Republicans who do not want to move an inch towards compromise. For the first time in over four years, the Senate passed a budget bill that set the parameters for a federal budget by Congress. At first House Republicans balked at organizing and conference committee, but the leadership, including House Speaker John Boehner (Ohio) and Congressman Eric Cantor (Va.) along with Congressman Paul Ryan (Wis.) agreed to move forward to organize a conference committee with the Senate. But, a few Senate Republicans, namely Ted Cruz (Texas), Mark Rubio (Fla.), Mike Lee (Utah) and Rand Paul (Ky.), have objected to this cooperation and are forcing an internal battle among Senate Republicans. Bets are on the old guard (or bulls) to win this one and a conference committee will be held. But note, Senate Republican Minority Leader Mitch McConnell (Kentucky) and Minority Whip John Cornyn (Texas) have not voiced an opinion and been absent from the conversation. One should congratulate the persistence and tenacity of Senator Patty Murray (D-Wash.) and Congressman Ryan to continue to talk and move in the right direction.

The President raised the political stakes and added to the political drama when he stated that he would veto all funding legislation, if agreement could not be reached to hold a conference committee on the budget plans voted on by the Senate and the House. Speaker of the House Boehner then claimed the President was threatening to shut down the government. We will see how long this stalemate continues.

Conversations behind closed doors continue with Republicans and the White House to come to some agreement, but at the moment each group is approaching the budget, deficit reduction and debt ceiling issues with significantly different solution positions. Some say there is a ray of hope for a resolution before Oct. 1 when FY 2014 begins or there could be dire consequences.

Appropriations

Over the last several years it has been very difficult to pass appropriations bills. Most of the time, government-wide appropriations have taken the form of continuing and budget resolutions to keep federal programs funded. And the debt ceiling has been added to this process. This year will most likely continue the “tradition.”

Currently, Washington lacks a clear path to enact FY-2014 appropriations or increase the nation's debt ceiling. Yet, both of these issues need to be resolved (temporarily or permanently) before this fall. Congress needs to also find a bipartisan approach to address the nation’s mounting long-term debt.

Since there is no agreement on how to address sequestration, House and Senate appropriators are $91 billion apart on next year's funding levels and will need to resolve the difference by Oct. 1st.

Any discussion over how to address the debt ceiling or FY-2014 discretionary levels is likely to be coupled with an important conversation over how to fix our country's unsustainable long-term debt burden. Historically, these "fiscal speed bumps" have helped to facilitate or accompany many important pieces of legislation. But, nothing is in the offing under current political climate.

To further exasperate things, although the sequestration calls for significant defense and non-defense reductions for FY 2014, neither the House nor the Senate currently intends to abide by them. Senate appropriators will soon be marking up funding bills at pre-sequester levels — $91 billion higher than what current law allows. House appropriators, although they are abiding by the top line sequester number, are currently set to blow through the defense-side cap by roughly $50 billion and put the difference into deeper non-defense cuts.

Recently, House Appropriations Committee Chairman Harold Rogers (R-Ky.) circulated a proposal that would shift FY-2014 funding from healthcare, job training and education programs to military and national security programs. (FY 2014 starts Oct. 1, 2013.) Just how big of a hit does this mean for education programs? Put it this way, the cuts the House Republicans have in mind for the upcoming fiscal year are four times larger than those under sequestration. That is, take education funding — already lower due to sequestration — and cut it again four times over.

The proposal would cut funding for the Labor, Health and Human Services (HHS), and Education appropriations bill by about $35 billion, or 22 percent less than the current level, in favor of protecting spending for the military and homeland security. Working within an overall spending limit of $967 billion, Rogers chose to allocate a total of $625 billion for the Defense, Military Construction-Veterans Affairs, and Homeland Security appropriations bills, a cut of $4 billion, or less than 1 percent from the current level.

The final appropriations in FY 2012 for programs covered by the Labor-Health and Human Services (HHS)-Education Appropriations Subcommittee totaled $157 billion. In 2013, after the sequester, it is approximately $150 billion. Under the House proposal for 2014, the figure would fall to $122 billion.

Rogers's allocations, informally known as "302(b)s," do not set funding levels for individual programs, but they do set the amount of federal money each individual appropriations bill is allowed to contain. Reducing the overall amount of money available in the Labor-HHS-Education appropriations bill by such a large percentage means that many individual education programs will likely take funding hits (exactly which ones will be determined later in the process.) The 302(b) sub-allocations are specified amounts that each appropriations subcommittee will be granted by the full House Appropriations Committee to design appropriations bills for the Department of Education and other federal agencies for the upcoming fiscal year.

Politico called Rogers's plan a "prescription for more stalemate unless the House and Senate leadership begin to get more serious about budget negotiations with one another and President Barack Obama."

President Obama, as well as Democrats in both the House and Senate, want to set a spending cap at $1.058 trillion — approximately $91 billion higher than Rogers's plan — that assumes the sequester is eliminated. CQ Roll Call reported on May 17, that U.S. Senate Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) plans to use a $1.058-trillion spending cap and that she was expected to begin circulating her 302(b) allocations to the committee during the week of May 20.

Democrats have expressed concerns about the disproportionate cuts to social programs and welfare spending. Although the House Appropriations Committee has voted for the 302(b) sub-allocations and has begun voting on defense spending bills, the Labor-HHS-Education 2014 spending bill would have to be approved both by the full House and Senate, so the cuts may never come to pass.

And there’s another reason the House Republicans are unlikely to succeed with their proposal: The last time Congress provided about $122 billion for the Labor-HHS-Education appropriations bill was FY 2002, without factoring in inflation. Do House Republicans really want to erase all of the funding gains for education made under the Obama and the Bush administrations?

An overall appropriations limit that conforms to the Budget Control Act and the House-passed budget resolution will almost certainly force spending reductions for some education programs (New America Foundation Budget Brief). As, the 2014 budget debate progresses through the halls of Congress, members will be considering whether or not they want to follow through with the reality created by a law they passed two years ago. The Budget Control Act of 2011 limits FY-2014 spending on appropriations (including most education programs) some $18 billion below the 2013 post-sequester level. House Republicans want to follow those limits, but they want to go a step further. They are proposing to increase funding for defense and national security programs while staying within that cap. That means everything else has to give.

As for sequestration, the Republicans want to continue it with no cuts to Defense. The Democrats including the President are taking a different tact by asking for higher taxes on the wealthy and more moderate selective budget reductions. The stalemate continues.

Federal Student Aid

Usually student financial aid policy does not become embroiled in political differences except when federal student loan programs became 100-percent direct lending. Currently, there are differences between the administration and the Republicans in the House and Senate on how to address the doubling of the interest rate for Stafford Student Loans after July 1, 2013. The rate will go from 3.4 percent to 6.8 percent.

If Congress fails to act by July 1, interest rates on subsidized student loans will double from 3.4 percent to 6.8 percent for millions of the neediest postsecondary students. This year, and every year Congress doesn't act, will cost a student borrower $1,000. Failure to act now will add $4.3 billion to students' debt burden for next year's loans alone.

A few weeks ago, the House passed the Smarter Solutions for Students Act (H.R. 1911) that, according to House Republicans, will prevent subsidized Stafford loans from doubling on July 1st. This passed on a party-line vote of 221 to 298. House Democrats contend that HR1911 would make college more expensive by charging students and families nearly $4 billion more in higher interest payments for their student loans. The legislation would also force students into loans with interest rates that reset every year of the loan, similar to the much discredited adjustable-rate mortgages. Democrats wanted to lock in a low-interest rate so it would be fixed and not fluctuate year-to-year.

The independent, nonpartisan Congressional Research Service (CRS) released a report showing how H.R. 1911 would increase the cost students and families have to pay for college. CRS found that students and families would pay higher interest costs under H.R. 1911 than they do today. For example, students who borrow the maximum amount of subsidized Stafford loans over five years would pay $10,109 in interest payments under the Republican bill, $4,174 if rates were kept at 3.4 percent or $8,808 if rates are allowed to double to 6.8 percent in July.

The Senate has passed out of committee a bill, but has been unable to have a vote on the legislation as a result of rule votes. If HR 1911 were to be passed in the Senate, the President has been advised by his senior staff to veto the bill. It is not clear what is going to happen over the next several weeks, but some compromises will have to be made if there will be a Senate bill and then a conference committee to address this problem. Democrats are trying to force a vote in the House.

Reauthorization of ESEA

The reauthorization of the Elementary and Secondary Education Act took a fast turn the week of June 3, when three different bills were introduced.

Senator Tom  (D-Iowa), who chairs the Senate’s Health, Education, Labor and Pensions (HELP) Committee, introduced the Strengthening America’s Schools Act. The next day, Senator Lamar Alexander (R-Tenn.), the ranking minority member of the Senate HELP Committee, introduced a substitute bill entitled Every Child Ready for College or Career Act. On the same day, House Education and the Workforce Committee Chair John Kline (R-Minn.) introduced his version for reauthorization called the Student Success Act (H.R. 5), which is similar to the Alexander bill.

The Senate bill was marked-up and voted out of committee on June 12. The vote was 12-10 and totally along party lines. For a detailed analysis of the Senate mark-up go to: http://blogs.edweek.org/edweek/campaign-k-12/2013/06/senate_committee_passes_democr.html?cmp=ENL-EU-NEWS2.

Harkin says he intends to bring his bill to the Senate floor sometime this year -- hopefully by the fall, and would allow amendments to be made during that process. But even if the overhaul makes it through the floor vote, it is unlikely to be signed into law because the predominant legislative vision in the House varies significantly. On the House side, Rep. Kline has scheduled a markup for the week of June 17. There is an expectation that his bill will be taken up in the House sometime this summer and possibly as early as July.

Conclusion

To say there is a conclusion would not be telling the truth. It seems almost nothing comes to closure on the Hill these days. And how does one come to a conclusion when so many balls are still up in the air. The best way to close is to say, “stay tuned,” because a few bills will be resolved by the end of the year. The best bet, and not necessarily conventional wisdom, are on immigration reform, student loan interest rates and the budget plan having a conference committee. Most of the others are up for grabs and it’s anyone’s guess what the resolutions will be.

 

Fritz Edelstein is a principal in Public Private Action, a consulting group. His work focuses on strategic government and constituent relations, business development strategy, advocacy research and policy analysis, strategic planning and resource development, and advocacy, outreach and public engagement. This work includes producing Fritzwire, the education Internet newsletter providing timely information on education and related issues. Read Fritzwire, Education’s Water Cooler, everyday to keep up with what is happening in education around the nation and in Washington, D.C. To subscribe write: fritz@publicprivateaction.com.

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