Budget Blog

July 5, 2016 - Washington Report

By Leah Wavrunek posted 07-20-2016 03:05 PM

  

This Week on the Hill

The House and Senate are in for part of the week, with votes expected on immigration and gun policy measures.

The House returns Tuesday and will consider 16 bills under suspension of the rules, including H.R. 4855, which modifies current securities rules to promote “crowdfunding” of small businesses and H.R. 5210, the Patient Access to Durable Medical Equipment Act. For Wednesday and the balance of the week, the House is scheduled to consider: H.R. 2646, the Helping Families in Mental Health Act, which includes a range of provisions that modify federal mental health programs and creates several new grant programs to help states and localities address various mental health issues; H.R. 5611, the Homeland Safety and Security Act, which allows the Department of Justice to temporarily delay the sale of firearms to individuals suspected of ties to terrorism who seek to purchase weapons; H.R. 4361, which deals with federal employee accountability; H.R. 5485, the $21.7 billion Financial Services appropriations bill for fiscal year 2017; and H.R. 1270, which modifies several rules related to health savings accounts to promote their usage. The House may consider a bill to extend federal aviation programs if an agreement can be reached; the current extension of the Federal Aviation Administration ends July 15.

The Senate returns Wednesday and will consider two bills, S. 3100 related to sanctuary cities that refuse to comply with federal immigration laws and S. 2193, which increases prison sentences for immigrants who illegally re-enter the country.

 

Fiscal Year 2017 Budget Update

Last week the Senate Appropriations Committee approved its final spending bill, the $52.1 billion State-Foreign Operations appropriations measure (the Ranking Member’s summary can be found here). The bill provides $37.2 billion in discretionary funding and $14.9 billion in Overseas Contingency Operations funds; overall, the bill is $100 million above the House version, but $591 million below fiscal year 2016 levels and $687 million below the Presidents’ request. The measure maintains current funding levels for refugees, provides an additional $300 million to Israel, and approves the transfer of $500 million to the U.N. Green Climate Fund, as pledged by the President during last year’s climate talks in Paris. The Military Construction-Veterans Affairs bill was up for a vote last week as part of the Zika conference report, but due to objections to the package, the $82.5 billion bill is now stalled and awaiting further action.

This week the House is scheduled to consider two appropriations measures in subcommittee. The State-Foreign Operations subcommittee will markup its bill on Wednesday and the Labor-HHS-Education subcommittee will markup its bill on Thursday. The full House will also vote on the $21.7 bill Financial Services appropriations measure, which cuts funding to the Internal Revenue Service, Securities and Exchange Commission and Federal Communications Commission while increasing funds for the Small Business Administration and federal judiciary.

 

President Signs Puerto Rico Debt Bill

After the Senate approved a bill (S. 2328) to address the Puerto Rico debt crisis on a vote of 68-30, the President signed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) into law on Thursday, one day before Puerto Rico defaulted on $2 billion of debt payments. The House had previously approved the bill by a vote of 297-127. The legislation establishes a fiscal oversight board and pauses litigation relating to defaults for at least six months; it also clarifies how Puerto Rico can restructure its debt outside of federal court. Additional information on the legislation can be found here.

 

Zika Response Legislation Blocked in Senate

Last Tuesday the Senate voted 52-48 on a final $1.1 billion Zika virus spending measure, falling short of the 60 votes required to advance the bill. Most Democrats were opposed to the bill, objecting to the level of funding, offsets used in the package and various policy provisions. The President requested $1.9 billion in emergency spending for Zika back in February, and he reiterated that request in remarks made on Friday. Senator Mitch McConnell (R-KY) stated that the Senate would hold another vote on the legislation after the July 4th recess, although it is unclear if members will meet to consider changes. Current Zika response efforts are being funded from $589 million in repurposed funds released in April.

 

Medicare Trustees Report: Potential Impact on 2017 Part B Premiums for Dual Eligibles

The Medicare Board of Trustees issued their annual report to Congress on the financial operations and actuarial status of the Medicare program. Total Medicare expenditures were $648 billion in 2015 and the Trustees project that expenditures will increase in future years at a faster pace than the economy, resulting in Medicare increasing from 3.6 percent of gross domestic product (GDP) in 2015 to 5.6 percent of GDP by 2040. The Trustees project that Medicare’s hold-harmless provision could be triggered in calendar year 2017 based on early data showing the potential for a 0.2 percent Social Security cost-of-living adjustment. Under this scenario, monthly Part B premiums would be limited to the increase in Social Security for beneficiaries who have their Medicare Part B premiums deducted from their monthly Social Security benefits. For the remaining beneficiaries, including dual eligible individuals, the report estimates monthly Part B premiums would increase by 22 percent (see page 34-35 of the report).  Provisions in last year’s Bipartisan Budget Act of 2015 (BBA) that provided relief from large increases would apply in 2017 only if there is no cost-of-living adjustment. The final adjustment will be announced in the fall based on updated data. Based on the current assumptions, there would need to be Congressional action to prevent the significant increase from occurring. The Brookings Institution provides an analysis of key points from the Trustees report and notes that prescription drug spending in Medicare is now growing quite rapidly; Part D spending increased by 15 percent in 2015 and it is expected to grow annually, on average, by 10.9 percent between 2015 and 2020.

 

Pell Grant Pilot Program Starts for Incarcerated Students

The Department of Education recently announced that 67 colleges and universities were selected to participate in a pilot program that would allow incarcerated offenders to receive Pell grants. The program is called the Second Chance Pell pilot program and is framed as “an experiment to test whether participation in high quality education programs increases after expanding access to financial aid for incarcerated individuals.” Under the pilot program, eligible incarcerated offenders can receive the grants to pursue postsecondary education to increase their employment opportunities upon release. The selected colleges and universities will work with more than 100 federal and state correctional institutions to enroll roughly 12,000 incarcerated students in educational and training programs; educational services will be provided on-site, online, or a combination of both. A list of the selected colleges and universities can be found here.

 

Legislation Introduced in House to Address Skills Gap

Last week bipartisan members of the House Education and Workforce Committee introduced the Strengthening Career and Technical Education for the 21st Century Act (H.R. 5587), which reauthorizes the Carl D. Perkins Career and Technical Education Act (P.L. 109-270) and contains reforms to help workers enter the workforce with the tools and skills necessary for high-skilled, in-demand jobs. Several of the reforms focus on state flexibility, including simplifying the requirements states have to follow when applying for federal funds, streamlining the application process and increasing alignment with the process for submitting the state workforce development plan, and increasing from 10 percent to 15 percent the amount of federal funds states can set aside to assist eligible students in rural areas or areas with a significant number of career and technical education students. A summary of the bill can be found here and bill text can found here.

 

Medicaid Budget and Expenditure System Enrollment and Expenditure Data Available

The Centers for Medicare & Medicaid Services (CMS) released updated Medicaid enrollment  and preliminary expenditure data, which is reported by states through the Medicaid Budget and Expenditure System (MBES). The enrollment data provides the total number of enrollees in Medicaid, and for states that have expanded Medicaid, the number of enrollees for the new adult eligibility group. The new enrollment data is from October 1, 2015 to December 31, 2015. The expenditure data provides a summary level of data associated with Medicaid expenditures as well as a breakout of expenditures associated with individuals in the expansion group. The updated expenditure data is from the collection form CMS-64 for the period April 1, 2015 through June 30, 2015.

 

Recently Released Reports

Assessment of Staffing, Services and Partnerships of Local Health Departments - 2015, U.S. Centers for Disease Control and Prevention

America's Divided Recovery: College Haves and Have-Nots, Center on Education and the Workforce at Georgetown University

Human Trafficking: Agencies Have Taken Steps to Assess Prevalence, Address Victim Issues, and Avoid Grant Duplication, U.S. Government Accountability Office

Economic Growth Slower Than Previous 10 Expansions, Congressional Research Service

State Tax Changes Taking Effect July 1, 2016, Tax Foundation

 

Economic News 

“Third” Estimate Shows GDP Grew Faster in First Quarter than Originally Estimated

The U.S. Department of Commerce Bureau of Economic Analysis released the “third” estimate for real gross domestic product (GDP) in the first quarter of 2016, showing that GDP increased at an annual rate of 1.1 percent. The third estimate is based on more complete source data than were available for the “second” estimate issued in May, which showed an increase of real GDP of 0.8 percent. The release explains that the increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures, residential fixed investment, state and local government spending, and exports. Real GDP increased 1.4 percent in the fourth quarter of 2015; the deceleration in real GDP in the first quarter of 2016 primarily reflected a deceleration in personal consumption expenditures and a downturn in federal government spending.