This Week in Washington

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As you no doubt know, there is some good news to report: this week the Congress passed, and the President signed into law, a bill that extends unemployment benefits through November. Thanks to everyone who advocated on this vitally important issue. We should take a moment to relish the victory, reflect on what it means for Ohio's struggling families, and thank the legislators who supported it. Then it's right back to work.

Unfortunately, that bill does not extend funding for the FMAP or the TANF emergency fund. So far, our hope that the passage of UI would ease the way to pass the remaining fully-offset extenders bill (H.R. 4213) – which includes $16 billion for the FMAP and a year-long extension of the TANF emergency fund -- has not come to be. We understand progress is more likely once the Senate finishes the Small Business bill (which should be early next week).

In separate action, the Senate passed a supplemental appropriations bill to provide war funding to the military but only after stripping out the $10 billion added by the House to reduce cuts in teachers’ jobs at the state level and nearly $5 billion to prevent cuts in other non-defense appropriations programs to keep the Pell Grant whole. This means we are going to have to work even harder to find opportunities to explain effectively why it's urgent to pass the additional FMAP assistance.

The combination of public skepticism about government and growing Congressional concern about increasing the deficit in advance of the upcoming elections is making it very difficult to gain traction on providing additional state fiscal relief.

MIDDLE CLASS TAX CUTS/REFUNDABLE TAX CREDITS
We had been encouraged by Senate Finance Chairman Baucus’s remarks at last week’s hearing in support of making the middle class tax cuts permanent. But the influential chairman of the Senate Budget Committee, Kent Conrad, who is also a member of the Finance Committee, suggested that he would support also extending the cuts in the top rates (and waiving PAYGO to do it!) He noted concerns about raising taxes in a recession. Given Conrad's stature in the Senate, this public indication from him is already having a significant impact and other senators are also now calling for the same policy. This is very disturbing and demands a swift and strong reaction.

We are concerned that enacting a temporary extension of the tax cuts for the very wealthy this year is very likely to lead to a permanent extension of these provisions given the political outlook for the next Congress – which would worsen our long-term deficit by hundreds of billions of dollars. If policymakers are concerned about the recovery and interested in continuing policies that help the economy, it would be far more effective and far more responsible to provide for additional state fiscal relief, a job-creation tax credit, and/or continue unemployment benefits into next year (since the unemployment rate will likely remain high).

UI/FMAP/TANF/EXTENDERS
We had been hoping that the passage of a separate unemployment insurance (UI) bill would pave the way for the Senate to reconsider a now fully-paid-for extenders bill including $16 billion for the FMAP and a year-long extension of the TANF emergency fund. So far we’re not getting much traction though action is still possible, especially once the Senate finishes the Small Business tax bill which should happen next week. The problem seems to be that not enough members of Congress currently see the urgency of extending these provisions from ARRA before they expire so we need to continue to look for opportunities to make this issue real. (The FMAP provisions expire at the end of December; the TANF EF expires at the end of September.) While it’s possible the TANF EF can be taken up in August, it’s increasingly likely that the FMAP will not be considered until September (assuming there is still an appetite in Congress to move the provision.)

WAR SUPPLEMENTAL/EDUCATION JOBS FUND
The Senate on Thursday stripped the $10 billion in teacher funding and nearly $5 billion to fill the shortfall in the Pell grant program from the War Supplemental and passed the bill, sending it back to the House in its original form. This came after a cloture vote to cut off the filibuster and move the House-passed bill (including the domestic spending) failed 46-51. No Republican senator supported the cloture vote and 9 Democrats and 1 Independent opposed it. It is very hard to see how these pieces can be enacted in any future legislative vehicles, but stay tuned!

SMALL BUSINESS TAX BILL/ESTATE TAX
The Senate resumed consideration of the Small Business Jobs bill this week. Although some concerns have been raised about provisions in the underlying bill, Majority Leader Reid was able to secure 60 votes to invoke cloture on a key amendment with the support of Republican Senator Lemieux from FL and Senator Voinovich from OH. This should pave the way for passage next week. Some obstacles remain to be worked out but they don’t affect the issues we care about.

No other amendments are expected to be considered before the final vote next week. Some Republicans, including Senator Snowe, have been grumbling about tactics used by Leader Reid to block most amendments from being offered.

Meanwhile, Senator DeMint forced a vote on the UI extension on making the estate tax repeal permanent. This effort was soundly defeated by a vote of 59 to 39.

APPROPRIATIONS
All 12 appropriations bills have been marked up at the subcommittee level in the House and the Leadership plans to bring the first two bills to the floor next week – Transportation-HUD and Milcon-VA. The Senate Appropriations Committee has reported out 6 of the 12 bills.

The House Labor-HHS Appropriations Subcommittee approved its bill this week. The Senate Labor-HHS Subcommittee will take up its version of the bill on Tuesday and the full Committee will consider it on Thursday.

CHILD NUTRITION
Senator Lincoln tried to offer an amendment to the War Supplemental appropriations bill to reauthorize the child nutrition programs. Her effort was unsuccessful, but she clearly sent a signal she would like to get this bill done this year.