March 17, 2006

• HEA Extension

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HEA Extension

Prior to recessing for the week long St. Patrick's Day holiday, the House passed HR 4911-The Higher Education Act of 2006. The bill temporarily extends the current federal Higher Education Act through June 30, 2006, with the exception of those reauthorized for five years under the recently enacted Higher Education Reconciliation Act of 2005 part of PL 109-171, The 2005 Deficit Reduction Act.

The House is tentatively scheduled to take up HR 609 — The College Access & Opportunity Act — during the week of March 27th.

The Department of Education's Dear Colleague Letter concerning the student loan changes made in PL 109-171 can be accessed at http://fp.ed.gov/fp/attachments/activities_whatsnew/
ReconDCLOPEPost.doc.

Federal Budget Update
On March 9, 2006, the Senate Budget Committee reported its version of a FY 2007 budget resolution (Senate Concurrent Resolution 83) on a 11-10 party line vote. All amendments offered to increase spending were rejected by similar votes. On March 16, the Senate passed S. Con. Res. 83 by a 51-49 largely party line vote with 43 Democrats and 8 Republicans voting against the measure.

A bipartisan amendment to transfer $6.3 billion from tax reductions to fully fund the TRIO, GEAR UP, LEAP, Perkins Loan programs, as well as to fund a $4,500 annual maximum Pell Grant failed on a 50-50 vote.

However, in a later vote, another bipartisan amendment was accepted on a 73-27 vote to add an additional $7 billion in discretionary funding to Function 500 (Education, Training, Employment, and Social Services) section of the resolution, which the Labor, HHS, and Education Subcommittee of the Appropriations Committee will have at its disposal to increase appropriations for these, and other, programs under its jurisdiction.

Altogether, Senate Democrats and moderate Republicans were able to add $16 billion in discretionary spending to the resolution, in effect, busting the cap on discretionary spending of $873 billion that the Administration, congressional leadership, and conservatives in both the Senate and House are insisting on maintaining. This sets up a major budget battle between the Senate and House, as well as, between conservatives and moderates in both parties and chambers.

The resolution, which Senate Budget Committee Chairman Judd Gregg (R-N.H.) characterized as a "standard plain vanilla" proposal leaves out most of the Administration's calls for another round of reconciliation reductions to entitlement programs to the tune of $65 billion, which a significant number of House Republicans want in the House resolution.

The Senate action came at the same time more than 100 House Republicans continued to call for a continuation of reductions to non-defense federal health, human services, and education programs through across-the-board discretionary appropriations and reconciliation reductions to entitlement programs.

The non-binding budget resolution lays out assumptions of spending and tax policies during the next five years and is used as a guide for allocating annual appropriations among federal agencies and programs, and must be reconciled with a House version of the budget resolution.

The measure does include a few of the Administration's proposals. It calls for opening Alaska's Arctic National Wildlife Refuge to oil drilling, increasing the national debt ceiling to almost $9 trillion (which was passed as a separate bill on a 52-48 vote), and limiting discretionary appropriations to $873 billion for FY 2007 (which was later increased to $889 billion against the Administration's wishes).

Under the resolution, the deficit would be slightly less in fiscal 2007 than in the current year, falling from $372 billion to $359 billion. It would dip to $159 billion in 2010 before rising again the following year. However, these numbers do not include any continuing costs associated with the wars in Afghanistan or Iraq.

The Senate budget resolution can be accessed at www.budget.senate.gov/republican.

Meanwhile in the House, the situation is markedly different. Disagreements in the House have forced Budget Committee Chair Jim Nussle (R-Iowa), to delay his Committee's mark up of the House version of the budget resolution to the end of March.

While the House leadership and House Budget Committee Republicans try to craft a House budget resolution that will include "reform" provisions to the budget process (including a modified line item veto for the president) and to campaign finance and lobbying practices, close to half of the House Republicans have built on last year's Deficit Reduction Act and the Administration's FY 2007 budget proposal and introduced a proposal of their own that they claim recaptures the spirit of the party's 1994 Contract With America.

The conservative Republican Study Committee (RSC) is calling for a budget-reconciliation package that would net $358 billion in savings over five years (instead of the Administration's $65 billion). The bulk of the savings would be found in changes to the Medicare, Medicaid, Food Stamps, healthcare programs for the elderly and poor, and K-16 education programs.

The RSC would turn the Medicaid program into block grants to states and establish means testing within the controversial Medicare prescription-drug program. A bloc of House conservatives voted against the creation of the prescription-drug program in 2003.

The Committee's budget proposal also includes the establishment of a Sunset Commission, earmark reform, caps of entitlement spending, a partial rollback of recent income tax reductions, and a prohibition of the practice advance/forward funding of programs.

The RSC's budget proposal has 103 House Republican members signed on and is available at www.house.gov/pence/rsc/doc/RSC_2007_BUDGET.doc.

It is unclear at this time how hard Republican leaders will press for savings from another round of budget reconciliation that, through last year's deficit reduction act, resulted in $39 billion in saving from entitlement programs ($12 billion from student loans). The sentiment in the House to do so is significantly stronger than in the Senate.

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