Budget Blog

July 18, 2016 - Washington Report

By Leah Wavrunek posted 07-20-2016 03:22 PM

  

This Week on the Hill

The House and Senate are in recess until September 6.

 

Fiscal Year 2017 Budget Update

The House continued work on appropriations bills last week, with votes on the floor and in the Appropriations Committee. The Interior-Environment spending measure passed the House by a vote of 231-196 and drew a veto threat from the administration. The $32.1 billion bill is $64 million below fiscal year 2016 enacted levels and $1 billion below the President’s request; it also reduces the budget of the Environmental Protection Agency by $164 million. Several policy riders were adopted, prohibiting implementation of many of the administration’s environmental regulations. The bill provides $480 million to fund the Payment in Lieu of Taxes program and includes funding to help address the problem of lead in drinking water across the country. The House Appropriations Committee approved the $52 billion State-Foreign Operations spending measure on a voice vote; the House version is $100 million less than the Senate version and blocks funding for a U.N. Climate Change fund. The Appropriations Committee approved its twelfth and final appropriations bill when it approved the Labor-HHS-Education spending bill by a vote of 31-19. The $161.6 billion bill is $569 million below fiscal year 2016 enacted levels and $2.8 billion below the President’s request. The measure increases funding to the National Institutes of Health and creates a $300 million infectious disease rapid reaction fund.

The Senate was unable to move the Defense spending bill forward for consideration; the next opportunity for consideration is September. The Military Construction-Veterans Affairs appropriations bill, which had been packaged with a $1.1 billion Zika response bill, was also blocked for consideration for the second time last week.

 

Opioids Bill Passes Congress

The House voted 407-5 and the Senate voted 92-2 to pass the Comprehensive Addiction and Recovery Act (S. 524), sending the bill to the President, who is expected to sign it. The bill creates several new grant programs at the Departments of Justice and Health and Human Services. However, the bill only authorizes the funding and any new grants must be funded through the separate appropriations process. The bill also includes several policy provisions, including allowing doctors and patients to request a prescription to be only partially filled; allowing nurse practitioners and physician assistants to prescribe the treatment medication buprenorphine; and promoting the development of abuse-deterrent versions of opioid painkillers. Democrats had sought $920 million in emergency funding to fund the new programs, but were unsuccessful.

 

CBO Releases Long Term Budget Outlook and Administration Posts Mid-Session Review

Last week the Congressional Budget Office (CBO) released The 2016 Long-Term Budget Outlook, which projects that federal debt will rise to 141 percent of gross domestic product (GDP) in 2046, exceeding the historical peak of 106 percent that occurred after World War II. The federal debt held by the public was equal to 39 percent of GDP at the end of fiscal 2008 and rose to 75 percent by the end of fiscal 2015. Major contributors to debt growth include increased spending on Social Security, major health care programs (like Medicare) and interest on government debt. Mandatory spending other than Social Security and major health care programs is projected to decrease as a percent of GDP, as is discretionary spending. Also last week, the Office of Management and Budget (OMB) released its Mid-Session Review, which contains revised estimates of receipts, outlays, budget authority and the budget deficit for fiscal years 2016 through 2026. The review states that the fiscal 2016 deficit is now projected to be $600 billion, $16 billion lower than the deficit projected in February; last year’s deficit was $438 billion. As a percentage of gross domestic product, the 2016 deficit is projected to be 3.3 percent, equal to the February projection. Looking ahead, the deficit is projected to fall to 2.3 percent of GDP in 2017 and remain below 3 percent through 2026.

 

FAA Extension Signed Into Law

Last week Congress passed, and the President signed, a bill extending authorization for federal aviation programs through September 2017; current authorization expired on July 15. The bill includes measures to increase airport security, enhance marketing of the trusted traveler program TSA PreCheck, and sets additional ground rules for drones, banning their use near airports and critical infrastructure. The measure maintains current levels of funding at approximately $13.6 billion per year, as well as keeping taxes on fuel and tickets at current levels. Not included in the bill was a proposal from the House to spin-off air traffic control operations to a non-profit entity.

 

CMS Report Finds Per Capita Health Expenditures Increasing

The Centers for Medicare and Medicaid Services’ (CMS) Office of the Actuary released the 2015-2025 Projections of National Health Expenditures last week. The data projects that health spending growth in the United States for 2015-2025 will average 5.8 percent annually, which is 1.3 percentage points faster than growth in Gross Domestic Product (GDP). By comparison, for the twenty year period preceding the 2007-09 recession, annual health spending growth was almost 8 percent. The report also shows that national health expenditures are estimated to have reached $3.2 trillion in 2015 and in 2016, per capita spending is expected to exceed $10,000 for the first time. The full report can be found here and an article on the study can be found here.

 

GMO Labeling Bill Heads to President

The House voted 306-117 last week to approve a compromise bill (S. 764) on labeling of genetically modified foods (GMOs); the bill heads to the President, who is expected to sign it. The bill prohibits state and local governments from passing mandatory labeling laws for genetically modified food products, beverages and ingredients while setting up the first national labeling standard. Under the bill, the Department of Agriculture (USDA) must establish a process for disclosure of GMOs, with larger companies being given the choice among three options: on-label information; a symbol developed by USDA; or bar codes that consumers can scan with smart phones. The department must also determine which products should be labeled as GMOs, with a disclosure process required within two years of the bill’s enactment.

 

EPA Announces Supplemental Brownfield Site Cleanup Funds

Last week the Environmental Protection Agency (EPA) announced the release of approximately $10.7 million in supplemental funding to communities to assist in the cleanup of contaminated brownfield properties. The funds will be allocated to 33 Revolving Loan Fund grantees that assist over 40 communities in cleanup and redevelopment projects. The supplemental funding to each grantee ranges from about $200,000 to $500,000 and is intended to help maintain momentum and increase the number of cleanups completed. A list of the grantees can be found here and information on the brownfields program can be found here.

 

Senate Budget Chairman Releases Budget Reform Ideas

After holding a series of hearings convened to review the federal budget process and discuss options to change it, Senate Budget Committee Chairman Mike Enzi (R-WY) released a set of proposals to reform the federal budget. The proposals (including moving to a biennial budget cycle) fall under four main categories: improving budget procedures; modernizing the government’s outdated accounting concepts; addressing the country’s long-term debt crisis; and adding predictability to appropriations. Senate Enzi has indicated a bill may be released for consideration when Congress returns in September. Meanwhile, House Budget Committee Chairman Tom Price (R-GA) has also held a series of hearings on the federal budget process, but has not released any recommendations or proposals at this time.

 

Recently Released Reports

Public Pension Funding Practices, Rockefeller Institute of Government

A Look at Rural Hospital Closures and Implications for Access to Care: Three Case Studies, Urban Institute

Why is State and Local Government Capital Spending Lower in the New England States than in Other U.S. States?, Federal Reserve Bank of Boston

State Voter Identification Requirements: Analysis, Legal Issues, and Policy Considerations, Congressional Research Service

EPA: Status of Efforts to Address Nonpoint Source Water Pollution, U.S. Government Accountability Office

 

Economic News

Job Openings Decrease to 5.5 Million in May

The number of job openings decreased to 5.5 million on the last business day of May, according to data recently released by the U.S. Department of Labor (down 345,000 compared to April). The prior three-month average change in job opening was +80,000. Job openings decreased in May for wholesale trade (-104,000), other services (-98,000) and real estate and rental/leasing (-53,000). The number of hires was little changed at 5.0 million in May and the hires rate remained at 3.5 percent. The number of separations was little changed in May at 5.0 million. The 2.9 million quits reported in May were little changed from April; many economists closely watch the number of quits as a measure of employee confidence in finding another job. Finally, layoffs and discharges were up in May at 1.7 million, compared to 1.6 million in April. Over the 12 months ending in May 2016, hires totaled 62.3 million and separations totaled 59.8 million, yielding a net employment gain of 2.5 million.

 

Consumer Price Index Increased in June as Real Hourly Earnings Declined

The U.S. Bureau of Labor Statistics released new data on the Consumer Price Index for All Urban Consumers (CPI-U) for June 2016, showing the CPI-U increased 0.2 percent on a seasonally adjusted basis. Over the last twelve months, the all items index increased 1.0 percent before seasonal adjustment. The index for all items less food and energy rose 0.2 percent in June, while the energy index rose 1.3 percent, due mainly to a 3.3 percent increase in the gasoline index. The index for all items less food and energy rose 2.3 percent for the 12 months ending June, a larger increase than the 2.2 percent rise for the 12 months ending in May. Meanwhile, real average hourly earnings for all employees decreased 0.2 percent from May to June, seasonally adjusted. This result stems from a 0.1 percent increase in average hourly earnings being offset by a 0.2 percent increase in the CPI-U.